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REPORT OF THE AUDITOR-GENERAL 




John S. Morlu, II 

Auditor-General, R.L 




Office of the Auditor General 
Republic of Liberia 

20 April 2011 

TRANSMITTAL LETTER 

REPORT OF THE AUDITOR GENERAL ON THE NATIONAL OIL COMPANY (NOCAL) FOR 
THE FINANCIAL PERIODS 1 JULY 2006 TO 30 JUNE 2008 

1. I am pleased to issue this report. It is the first audit I have commissioned on the accounts and 
related records of the National Oil Company of Liberia (NOCAL). The report covers financial 
period 1 July 2006 to 30 June 2008. 

2. The report was initially issued to NOCAL. But immediately following the release of the Draft 
Management Letter, the Engagement Manager, Fabian Lah, joined NOCAL as an employee. In 
order to decrease the risk of incorrect acceptance of the report, I appointed, Alieu Konneh as 
Engagement Manager who was not part of the original audit to review the working papers and 
carried out additional examination of the financial statements and related records of NOCAL to 
enable me provide my opinion. 

3. As indicated in the methodology segment of the report, all findings conveyed in the report 
were formally communicated to the Chairman of the Board of Directors, President and the 
responsible desk officers of NOCAL for their responses. Where responses were provided, they 
were evaluated and incorporated verbatim in this report. In the Auditor General's Position, I 
analyzed and evaluated responses received. I noted instances where documentary evidence, 
material justifications and the substantive authority were not provided to cure the deficiencies 
noted. 

4. Between 2002 and 2007, a Memorandum of Understanding (MOU) and two amendments to 
the MOU, regarding the sale of Liberia's 2D Seismic Data, were entered into between the 
National Oil Company of Liberia (NOCAL) and TGS-NOPEC Geophysical Company based in 
Texas, United States of America. Under the MOUs, TGS-NOPEC acquired, processed, and 
interpreted seismic data offshore of Liberia approximately 9,382 kilometers from deep water. 

5. Under the 2002 MOU, though NOCAL was required to be paid 50% share from proceeds 
generated by the licensing of the seismic data, only 10% share was remitted to NOCAL's 
account. As a result, US$305,680.03 covering transactions undertaken from 2002 to 2008 
which accrued to NOCAL was not remitted to NOCAL's account. Inclusive of this amount was 
the miscellaneous receipts associated with sales of 2D Seismic Data, which were not reported 
to NOCAL. Accrued interest thereon (i.e. 14% at CBL rate for lending to commercial banks) as 
a consequence of TGS-NOPEC withholding of NOCAL's portion of revenue from 2002 to 2007 
was US$42,795.20, thus bringing the amount due NOCAL to US$348,475.23. 



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6. 



Similarly, US$1,034,858.41 payable to NOCAL from the sale of seismic data between 2002 and 
2008 was not remitted to NOCAL until October 2008. Accrued interest on this amount withheld 
(i.e. 14% of unremitted revenue) totaled US$144,880.17. 



7. TGS-NOPEC, in a number of situations, disregarded the provisions of the MOUs entered into 
with NOCAL. There was also no evidence that NOCAL's Management intervened to make TGS- 
NOPEC compliant. TGS-NOPEC non-compliance would impact the development of the Oil and 
Gas Industry in the Republic of Liberia and thus deny economic benefits that could accrue to 
the people of Liberia. NOCAL's Management did not provide clarity regarding its default in the 
opening of the Escrow account for revenue remitted by TGS-NOPEC. 

8. Additionally, I also discovered two outstanding payments, totaling US$454,000.00, from the 
Revenue Report of TGS-NOPEC and sales invoices submitted by TGS-NOPEC. This amount was 
owed by Mittal Investment and Hong Kong Tai Petroleum International Corporation since 30 
June 2008. 



9. TGS-NOPEC has, on account of the audit conducted, remitted US$1,266,102.59 out of 

US$1,655,965.36 assessed, as outstanding revenue since 2002 into NOCAL's account. This 
amount was assessed by me and TGS-NOPEC paid. During the course of the audit, I noted 
that TGS-NOPEC has made significant improvement in reconciling NOCAL's account and 
remitting promptly the share of revenue due NOCAL. 

10. As indicated in the report, records on NOCAL revenue sharing with TGS-NOPEC were found 
inadequate due to the records not indicating details of revenue generated for each given 
period with the necessary adjustment, including discounts allowed and additional fees charged 
to clients' accounts. The records provided revealed summary of revenue amounts year by year 
with no indication of references/ folio numbers, which could lead to omissions, thus providing 
opportunities for manipulation of the records. As a result, it was impracticable to render 
opinion on the financial statements regarding NOCAL's revenue sharing. 



11. I therefore recommended that NOCAL's Management, in its dealings with TGS-NOPEC, should 
establish and insist on transparent processes to ensure that financial records and reports 
regarding NOCAL's revenue sharing are accurate and complete. NOCAL's Management should 
also incorporate in its agreement with TGS-NOPEC on the development of the oil and gas 
industry in the Republic of Liberia, measures to ensure independent review and monitoring of 
accounting and reporting functions, and that these are performed on a regular and timely 
basis. 



12. US$118,400.00 was paid from NOCAL's Account as "Lobbying Fees" to the National Legislature 
in order to ratify petroleum contracts that were pending before the National Legislature. 
Though the Board's Chairman intimated that the lawmakers requested for such an amount 
from NOCAL to rapidly ratify the contracts, no evidence was provided to justify the claims of 
the Board's Chairman. 



13. The payment of the purported lobbying fees to the Legislature is unlawful, and contravenes 
Section 12.50(1) of the Penal Law of Liberia which states "a person has committed bribery, a 
second degree felony, if he knowingly offers, gives or agrees to give to another or solicit, 

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accepts or agrees to accept from another, a thing of value as consideration for: (a) The 
recipient's official action as a public servant, or (b)The recipient's violation of a known duty as 
a public servant." 

14. Minutes of the NOCAL's Board of Directors indicated that the Board was also concerned that 
payment of such amounts to influence the passage of the petroleum contracts of Broadway 
PLC and Oranto Petroleum was irregular, a form of bribery. 

15. The Board's Chairman in his response to the findings of the audit made these assertions: 

"After consultation with the authorities we gave in to their demands, 
reluctantly. The first amount was $ 50,000.00 was approved by the Board. " 

"A scrutiny of the minutes will reveal that we did not have fund at the time; the Board 
authorized management to borrow it from the LPRC. A second payment was made to the 
Legislators without the approval of the Board. I was informed by Dr. Kromah, NOCAL's 
President that the situation demanded that this amount be paid right away. I do not 
believe I was even in the Country and many Board members were unavailable. " 

16. Board Chairman Urey admitted to the Board's approval of the US$50,000.00 borrowed from 
LPRC for the purpose of bribing the Legislature for the passage into law of these petroleum 
contracts. By his admission, he is saying that he and the Board Members were aware of the 
disbursement from the borrowed US$50,000.00 from LPRC to a Member of the National 
Legislature and the Chief Clerk of the House of Representative. Montserrado County District 
#1 Representative received US$40,000.00 as authenticated by the receipt issued by her and 
the Chief Clerk James Kaba received US$1,500.00 as also authenticated by a receipt issued by 
him. 



17. The Management of NOCAL did not provide any evidence of how and to whom the balance 
US$76,900.00 was paid. The refusal to provide the names of the members of the National 
Legislature who received the US$76,900.00 further demonstrated the irregular nature of the 
transaction. As noted, Board Chairman Urey indicated in his response to the findings that: 

"A second payment was made to the Legislators without the approval of the Board. I was 
informed by Dr. Kromah, NOCAL s President, that the situation demanded that this amount 
be paid right away. I do not believe I was even in the Country and many Board members 
were unavailable. " 



18. By these statements, Chairman Urey attempted to exonerate the Board from all other 
subsequent payments made by the Management of NOCAL. His attempt to exonerate himself 
and the Board is feeble because he admitted that he and the Board authorized some of the 
payments. Chairman Urey contended, "the Board authorized management to borrow it from 
the LPRC." This clearly showed that the bribery was authorized by the Board's approval to 
borrow US$50,000.00 from LPRC. The number of authorizations the Board provided was not 
material and is not the issue. Instead the action of the Board to authorize the first payment 
was irregular and a breach of the Penal law of Liberia, setting the basis for the President/CEO 
to exploit the opportunity. 

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19. The Management in flagrant disregard to the laws of Liberia in its response stated: 

"Although management recognizes that this is a common practice, however, from 
henceforth we will refrain from so doing. " 

20. 'Common practice' cannot supersede the laws and Constitution of the Republic of Liberia. I 
acknowledged Management's response that it will refrain from the act of giving funds to 
members of the National Legislature but I am required to report as of date, meaning reporting 
material events that occurred during the course of the audit. 

21. 'Common practices' of giving funds to some members of the Legislators through the provision 
of public funds to ratify contracts and concessions is not an acceptable practice, as in some 
jurisdictions there is severe penalties including criminal charges for inducing Legislators 
through the giving of funds. The United States Foreign Corrupt Practices Act of 1977 prohibits 
the giving of money to public officials to influence official decisions, such as for the sole 
purpose of ratifying concessions and contracts. This alleged and un-spoken 'common practice' 
also contravenes sections 12.51 and 12.52 of the Penal Law of Liberia which prohibits 
unlawful rewards and compensation to public officials. 

22. Furthermore, 'Common practice' of giving funds to some individual members of the National 
Legislature was also not done in the manner that was transparent and accountable. For 
instance, besides the receipt of the US$40,000.00 from Representative Barr and the 
US$1,500.00 paid to Chief Clerk Kaba, the Management of NOCAL did not provide any 
evidence of how and to whom the balance US$76,900.00 was paid. 

23. Chairman Urey further indicted the Board and Management when he contended: 

"These Contracts were presented to the National Legislature on August 17, 2006. They 
were not ratified until April 16, 2007, a period of about eight months. " By his own 
admission, NOCAL had to pay off the Legislators to ensure passage of the contracts, as 
again, Chairman Urey defended that "we gave in to their demands, reluctantly. The 
first amount was $ 50,000.00 was approved by the Board. " 

24. I recommended that the US$118,400.00 purportedly paid as lobbying fees be refunded to 
NOCAL's coffers by Madam Alomiza Ennos Barr, Member of the House of Representative, 
James Kaba, Chief Clerk of the House of Representative, and Dr. Fodee Kromah, President of 
NOCAL. Except for a payment received and signed for by Madam Barr in the tune of 
US$40,000.00 and another payment signed for by Chief Clerk Kaba in the tune of 
US$1,500.00, there was no evidence of receipt by the National Legislature of US$76,900.00. 
On the basis of the information and clarification provided by Chairman Urey, I recommended 
that Dr. Kromah refund the amount and that the Minister of Justice employs the necessary 
legal means to remedy the fraud and the contravention of Liberian laws. 

25. Additionally, I have recommended that the petroleum contracts of Broadway PLC and Oranto 
Petroleum Ltd ratified by the Legislature and signed by the President of the Republic of Liberia 
are immediately nullified, because the process was compromised by bribery and influence 



peddling, thereby denying assurance that the contracts were ratified for the benefit of the 
Liberian people. 



26. I also recommended that the Minister of Finance should regulate inter-government borrowing 
by clearly defining the parameters and purposes for which inter-government borrowing can be 
carried out. NOCAL borrowed US$50,000.00 from the Liberia Petroleum and Refining Company 
(LPRC) for no other purpose but to pay what is referred to as "lobbying fees" to the 
Legislators to ratify two petroleum contracts. LPRC, like NOCAL, is a state-owned enterprise. 
This regulation will prevent the misuse of public funds, as clearly the money borrowed from 
LPRC was misused for the sole purpose of influencing the passage of these contracts by the 
National Legislature. 

27. A number of irregularities were also noted with the operations of NOCAL's Board. Inclusive in 
these irregularities was Management's decision to procure a twin cabin-pick-up valued at 
US$34,500.00 for the Board's Chairman. This was an act not supported by NOCAL's guidelines 
or any other policy of the Company. 

28. NOCAL's Board made several changes in the fees paid to the Board. Fees paid since 1 July 
2006 to 2008, ranged from US$1,000.00 per quarter in 2006 to US$2,000.00 in 2007 and 
US$3,000.00 in 2008. It was unclear what considerations underpinned the changes in the 
remuneration. 

29. Additionally, a quarterly allowance of US$2,050.00 was paid in advance to a Board's member 
contrary to the Act creating NOCAL. The advance paid was also wrongly charged to the 
Company's Board expense account instead of a receivable account. 

30. It was also noted that NOCAL's President/CEO was paid Board remuneration, a benefit not 
approved by NOCAL's Enabling Enactment and a contravention of Article 90 (b) of the 
Constitution of Liberia. My review also revealed that Management made payment of Board 
fees to four senior staff in the tune of US$2,800.00. It was also noted that US$300.00 was 
paid to Accountant Timothy Wiaplah. 

31. NOCAL's Enabling Enactment explicitly states that the NOCAL Board of Directors is appointed 
by the President, which comprised of seven (7) members and shall be paid fees. This implies 
that only those appointed by the President shall be entitled to Board fees. The lapses noted 
was recognized by Board member, Peter B. Jallah, Jr in the Board meeting held on Thursday, 
6 December 2007, where he questioned the attendance of non-board members to Board 
meeting. Though the President, Dr. Kromah, asserted that he has the right to invite any staff 
or member of management to a Board meeting, in my view, to pay non-board members fees 
because they were invited to a Board meeting is irregular. This is because only duly 
appointed Board members should be paid Board fees for attending Board meetings. 
Employees can be called upon by the Board to provide clarifications on matters as required by 
the Board but are not entitled to Board fees. 



32. Management did not deduct taxes from the fees paid to Board members. Taxes were also not 
deducted from Board's remuneration paid to some senior management staff of the Company, 
thus denying Government the required taxes that are vital for national development. I thus 

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enquired from Management on the matter and accordingly, the Senior Accountant, Timothy 
Wiaplah, explained that payments made to Board members were done without the necessary 
tax deduction because he had not been instructed by the Management to do so. I did not 
accept this as a material justification. 

33. Contrary to the provisions of NOCAL Act that the President of Liberia shall appoint the 
Chairman and members of the Board of Directors as well as the President and Chief Executive 
Officer of the Corporation, I observed that it was only the Board's Chairman who was 
appointed by the President. The rest of the Board Members were appointed by Morris G. 
Saytumah, Minister of State for Finance and Legal Affairs. 

34. For the appointment of the Chief Executive Officer, Vice Presidents and other Executive 
Officers of NOCAL, the President of Liberia directed that a Search Committee be constituted to 
effect those appointments. However, I was not provided evidence indicating that the Board 
ever constituted the Search Committee to undertake the appointments as directed by the 
President. 



35. Besides, neither the Management nor the Minister of Presidential Affairs, upon request, 
presented evidence to me to show that the current Board took stock of NOCAL's performance 
and set Strategic Goal or Direction for the Company as directed in the President's appointment 
letter of the Board's Chairman. On the issue of Board's appointment, Management provided 
the following excuse and blamed the entire irregularity on the Ministry of State: 

"We like to clarify here that it is the prerogative of the President of Liberia to decide who 
responsibility of that office should be delegated to. Similarly, letter from the President of 
Liberia not on official Ministry of State Letter head does not fall within NOCAL's purview. 
Therefore, the Ministry of State should be contacted to provide explanation on why letter 
written to Board members were not on official letter head. " 



"We acknowledge this finding on the lack of curriculum vitae for Members of NOCAL s Board. 
But it is consenting to note that we are not the appointing authority, therefore the 
submission of curriculum vitae is not a prerequisite to be accepted as a Board member. " 

36. The Ministry of State was contacted. The irregularity was noted and accepted. But 
management's contention is also flaw. For instance, good corporate governance would 
indicate that before management makes a payment such as board fees to Board members, 
management would have exercised the maximum level of due care to ensure that all board 
members who were paid were duly appointed by the President of Liberia. Management is 
expected to know the legal instrument creating NOCAL. The Management is also expected to 
know that it is not normal practice for appointment letters to be written on a "flying sheet" 
without a letterhead from the Office of the President or the Ministry of State, assuming such 
appointments were on the basis of a directive from the President. 

37. It is clearly stipulated that the President must appoint all Board members of NOCAL. By 
management's contention, it is indicating that Management ignored this provision of the law 
and paid out funds to board members that were not duly appointed by the President of the 
Republic of Liberia. The Management has yet to provide me the basis of payments of board 

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fees etc, although it has acknowledged that it did not even have on its file curriculum vitae of 
each Board member. This was complete negligence on the part of management, which cannot 
be explained away by blaming the Ministry of State. 

38. On the issue of the Search Committee, Management contended: 

"However, as instructed by the President of Liberia, a Search Committee was organized 
and the recruitment process was competitive. Reference Annexure "A "for evidence of the 
recruitment process conducted by the Search Committee. " 

39. The Management did not present evidence that the proposed searched committee was 
constituted by the Board. Besides, Management did not attach the referenced Annexure "A" as 
cited by management in its response. A Board minute constituting the Search Committee was 
also not provided by management. The names of the members of the Search Committee were 
not provided by the management. A report from the purported Search Committee was also 
not provided by management. I also was not provided any evidence of expenditure made by 
the purported Search Committee, or any per diem or other remuneration paid to any member 
of the purported Search Committee. 

40. Additionally, there was no complete documentation on capital injections made by 
Government of Liberia into the Company since its creation in 2000. My review indicated that 
so far US$326,604.56 had been injected, which exceeded the proposed initial capital of 
US$250,000 stipulated in the Act by US$ 76,604.56. The amount paid by Government was 
also not reflected in the financial statements. The Management attempted to provide 
justification on the excess payment on the basis that the President has the prerogative to 
increase the Government of Liberia's capitalization. Management contended: 

"The President of Liberia has the power to increase this capital injection from time to time. 
Therefore, an analytical process showing variances and emphasizing excess is unclear. 
Because, it is the Government discretion that the capital injection changes from time to time 
depending on the prevailing situation. " 

41. Neither the Government of Liberia nor the NOCAL's Management provided the substantive 
basis for the excess payment, such as what material justification informed the decision for 
the excess payment. For instance, management did not provide me a report indicating a 
request from NOCAL's management that it needed additional capitalization. There was also 
no document provided to indicate the analysis that was done by the Office of the President or 
the Minister of Finance to convince me that the payment was necessary and required to keep 
NOCAL afloat. There was no indication that this excess payment was approved by the Budget 
Committee and the National Legislature. 

42. The Management also did not provide evidence that it submitted a capitalization schedule to 
the President, disclosing to the President the US$150,000.00 that it has acknowledged to 
have been paid by the National Transitional Government of Liberia. Hence, although 
management has contended that the Government of Liberia through the President has the 
discretion to increase its capitalization of NOCAL, it is reasonably expected that such 
discretion is based on sound analysis and adequate documentation. Therefore, Management's 



contention that the only material justification that it can provide for the excess capitalization 
is the discretionary powers of the President cannot be sustained on the merits, as 
transactions in Government are governed by law and sufficient appropriate documentation. 

43. Fuel Slips/Coupons used within NOCAL were internally printed by the Company and not 
serially pre-numbered. The Human Resource Manager was assigned the sole responsibility of 
managing the Company's fuel supplies in respect to order, custody, handling and distribution 
of fuel coupons/slips. The process of a single person managing all aspects of fuel supplies 
made it impracticable to verify the quantity of coupons purchased and quantity distributed 
during the period under review. Additionally, in the procurement of fuel/gas for NOCAL, the 
provision of Section 53(a) of the PPC Act of 2005, which requires the use of the quotations 
and shopping method, were not complied with. As a result, procurement was carried out 
without due procedures being adhered to and therefore, I could not provide assurance that 
value for money was achieved in the supplies obtained. 

44. There was no framework established by the Management of NOCAL to determine the nature 
of assistance that could be granted under its Management Assistance Plan as well as 
thresholds that disbursements on the Program may be limited. But management paid 
US$5,000.00 to a Senior Geologist of the Company as "assistance for relocation". There was 
also no evidence of related documentation accounting for the disbursement. The granting of 
assistance to personnel of the Company, not on the basis of a well-documented framework 
approved by NOCAL's Board, could provide unfettered opportunities for the abuse of the 
Company's funds. 

45. For the periods under audit, the Internal Audit Department (IAD) was not established within 
NOCAL. An Audit Committee neither existed at the level of NOCAL's Board. The IAD is an 
independent review mechanism established by Management to oversee the attainment of the 
entity's overall objectives in an orderly, efficient, economic and effective manner. The non- 
existence of an IAD was a drawback to the Company's attainment of its objectives. I 
recommended during the course of the audit that an IAD is established and an Audit 
Committee is created. 



46. NOCAL did not provide evidence that it has Financial Regulations and Accounting Manual. 
The manual is required to provide guidance to the finance staff in the discharge of their 
functions. The absence of the financial regulations and rules governing the operations of the 
Company that would have outlined procedures, processes and controls for the Company's 
activities, made the control and management of revenue and disbursement of funds at the 
discretion and personal judgment of Management. This omission also provides opportunity 
for errors, fraud, waste and other malpractices. Management in response to the findings 
asserted, "Our present accounting manual was modeled to include the generation of the 
Company's revenue and how payments are made in line with GAAP". 

47. The Management's contention that NOCAL's accounting manual is consistent with generally 
accepted accounting principles (GAAP) is without merit. NOCAL did not even indicate which 
GAAP, as for example United States GAAP, British GAAP, IPSAS, IFRS, etc. Furthermore, the 
financial statements, as noted, showed that they are not prepared on the basis of GAAP. 



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48. NOCAL did not maintain general or subsidiary ledgers; neither did it compile bank 
reconciliation statements for NOCAL's bank accounts during the period under audit. The non- 
compilation of bank reconciliation statements indicated that irregular dealings of the 
Company through the bank may not be promptly uncovered. I recommended that the 
Comptroller ensures that the Company's accounts are reconciled monthly through the use of 
bank reconciliation statements and that these statements should be reviewed by him and 
signed off by the Vice President for Finance and Administration. 

49. The Management disposed off five vehicles of the Company without following PPC Act, 2005 
disposal provisions. Management did not provide evidence that the process leading to 
disposal of government assets as clearly defined under Part VII Sections 123 and 124 of the 
PPC Act of 2005 was adhered to. I was, thus, unable to provide assurance that the 
Company's assets were properly safeguarded and accurately disclosed in NOCAL's final 
accounts. 



50. Travel advance payments totaling US$136,584.78 granted to NOCAL's officials for various 
assignments outside the city of Monrovia were not retired. Also several travels by officials of 
NOCAL between October 2006 and April 2008 funded at the total cost of US$13,421.61 were 
not supported by relevant documentation, such as invitations and approval letter of foreign 
trips, copies of travel documents that were provided including boarding passes and used 
ticket stubs, or photocopies of passports. The lack of these documents denied assurance that 
travels were actually undertaken by the officials of the company. 



51. Additionally, NOCAL established and used rate of per diem not provided for in the extant 
Executive Ordinance No. 8 for payment of both management personnel and other personnel 
of the Company, who undertook foreign travels during the period under review. In almost all 
cases of foreign travels made from July 2006 to June 2008, NOCAL's management did not 
comply with section 54 (1,4) of the PPC Act and Executive Ordinance NO. 8. 



52. Furthermore, by the terms of the contracts entered into with, Oranto Petroleum Ltd and, 
ROPSOL separately, the parties were supposed to fund travel and other related costs of 
NOCAL personnel who travelled to attend meetings held outside Liberia. NOCAL advanced 
US$55,044.05 and US$ 71,080.28 to its personnel attending such meetings on behalf of 
Oranto Petroleum Ltd and ROPSOL respectively. However, these advances have not been 
recovered from Oranto Petroleum Ltd and ROPSOL as at the time of audit reporting. 

53. Three bank accounts maintained by NOCAL at Ecobank for 2006/2007 fiscal year indicated 
that NOCAL had total revenue collections of US$ 1,059485.61 as opposed to the 
US$742,339.92 reported in the 2006/7 Income Statement, thus reflecting a variance of 
US$316,845.69. Similarly, my analysis of revenues for 2007/8 fiscal year revealed total 
revenue of US$3,200,438.30; NOCAL however reported US$ 2,627,081.23 for 2007/8, 
again resulting in a variance of US$ 573,357.07 of under reporting. 

54. Similar discrepancies were noted with GOL subsidy to NOCAL, receipts from TGS-NOPEC and 
Miscellaneous Revenue in the financial statements. GOL subsidies to NOCAL and receipts 
from TGS-NOPEC were reported in the financial statements as US$154,705.21 and 
US$8,568.51, instead of US$154,281.64 and US$5,408.54 respectively. Because management 

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did not use CBL exchange rate between the L$ and US$, GOL Subsidy to NOCAL was under- 
stated by US$7,324.87 in the financial statements. Furthermore, US$5,000.00 collected from 
Broadway Consolidated PLC as reception presentation fees were not reported in the final 
accounts of the Company. 

55. Analysis of NOCAL's budget and financial statements for the periods under review indicated 
that payroll costs were not supported by records substantiating the payments. Additionally, 
US$38,610.00 and US$42,350.00 paid as allowances to employees in 2006/2007 and 
2007/2008 respectively, were not reflected in the financial statements, despite being 
budgeted for. Also Social Security contributions amounting to US$1,365.35 withheld from July 
2006 -January 2007 were not remitted to NASSCORP, but were later refunded to the 
employees that had contributed to the Social Security scheme. 

56. Income taxes deducted from employees between July 2006-June 2007 and July 2007-June 
2008 were also not remitted to the Ministry of Finance promptly as required by the Revenue 
Code of 2000. I noted up to 10 months delay in remitting withholding taxes to the Ministry of 
Finance. Unpaid Income Taxes which amounted to US$4,313.30 and due to Government of 
Liberia for the period of July 2006 to June 2008 was still outstanding as at the time of 
reporting. The delay and non-payment of Withholding Taxes on a timely basis could also 
deny GOL of the required revenues, which may also cause NOCAL to pay unnecessary 
penalty for late payment. 

57. US$41,980.07 paid to the General Revenue Account of the GOL, representing customs 
charges, was not approved by the appropriate authorities and supported by relevant 
disbursement vouchers (DVs). During the two fiscal years under review, a total of 
US$54,172.45 was expended without relevant DVs supporting the expenditures. Also, 
contrary to NOCAL established procedures, disbursements totaling US$32,034.79 & 
L$2,470.00 were made without the approval of the President of NOCAL. NOCAL transactions' 
non-conformity with established procedures and absence of DVs to support expenditure 
denied assurance on the validity of transactions undertaken accordingly; Management was 
advised to strictly adhere to control procedures regarding the certification and approval of 
DVs. 



58. For the period under audit, the Management of NOCAL entered into a number of consultancy 
agreements, among which includes the hiring of Board member, Stephen Dunbar as retained 
lawyer. Cllr. Stephen B. Dunbar as evident by relevant supporting documents was paid 
US$15,615.00 for legal services. It is instructive to note in the 22 May 2007 meeting of the 
Board, Cllr. Stephen Dunbar advised against the hiring of an in-house lawyer and prevailed 
on his colleagues to retain a legal counsel. He was therefore selected as the Legal Counsel. 
This indeed was a material conflict of interest in direct contravention of Article 90 (a) of the 
Constitution of Liberia and Section 131 of the PPC Act, 2005 which prohibit conflict of 
interest. Cllr. Stephen Dunbar acted ultra virus to his position as member of the Board of 
NOCAL, thus breaching his fiduciary responsibility to NOCAL. 

59. Furthermore, Management paid Cllr. Peter B. Jallah, also a NOCAL's Board member, 
US$500.00 on 26 September 2006 on check #44546 for legal services rendered to NOCAL, 
even though NOCAL already had Cllr. Stephen Dunbar as its Retained Lawyer. It is instructive 

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to note that the hiring of Board Member Peter B. Jallah to render services to NOCAL again as 
a consultant contravened Article 90 (a) of the Constitution of Liberia and Section 131 of the 
PPC Act, 2005. 



60. Overall, both financial and administrative activities undertaken by NOCAL's management 
during the period under review were marred by a number of financial irregularities and 
control deficiencies. The financial irregularities noted amounted to US$406,384.26 and 
L$15,315.00. Details of these deviations are provided in Annexurel. 

61. Her Excellency, the President of the Republic of Liberia, the Speaker, House of 
Representatives and the President Pro-Tempore of the Liberian Senate, the above issues are 
symptomatic of others noted in this report. I advise that their resolution be considered a 
matter of urgency. 




John S. Morlu, II. 7, 
(Auditor-General, RL) 




XI 



Promoting Transparency, Accountability, Integrity and Fiscal Probity 




w 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Table of Contents 

ACRONYMS USED 4 

EXECUTIVE SUMMARY 5 

Background 5 

Limitation of Responsibility 5 

Scope Limitation 6 

SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS 6 

Operational Matters 6 

Liberia 2D Seismic Data Sales: Performance of Sales Contract 6 

Unreliable Accounting Records on Liberia Seismic Data Sales 7 

Lobbying Fees Paid to the National Legislature 8 

Governance Issues 8 

Irregularities noted with Board activities 8 

Illegal Constitution of NOCAL Board of Directors, Capitalization and Setting of Strategic Goals 9 

Administrative Matters 10 

Irregularities Noted with Procurement of Goods 10 

Management Assistance Plan 11 

Internal Control-Related Issues 11 

Non-Establishment of Internal Audit Unit within NOCAL 11 

Absence of Financial Regulations and Accounting Manual 12 

Non-Compilation of Bank Reconciliation Statements and Inadequate Accounting Documentation .12 

Accountability for NOCAL Assets 12 

Irregularities Noted With Travels 13 

Financial Matters 13 

Discrepancies in Reported Revenue 13 

Personnel-Related Costs Reported in Financial Statements 14 

Disbursements without Authority 15 

Statement of Accountability 15 

DETAILED REPORT 16 

Introduction 16 

Background of NOCAL 16 

Management Personnel 16 

Scope and Objective of the Audit 16 

Audit Methodology 17 

Scope Limitation 18 

1 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 

°-.'2.;s™.s.t£t* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Limitation of Responsibility 18 

DETAILED FINDINGS AND RECOMMENDATIONS 19 

Operational Matters 19 

Liberia 2D Seismic Data Sales: Performance of Sales Contract 19 

NOCAL Share of Revenue Under-remitted 21 

Delay in Remittance 21 

New Revenue Sharing Fee Established Without Formal Agreement 21 

TGS-NOPEC and NOCAL Failure to Establish Escrow Account per MOU 22 

Outstanding Revenues through TGS-NOPEC to NOCAL 23 

TGS-NOPEC's Failure to Provide Accurate and Complete Underlying Accounting Records 24 

Payment of "lobbying fees" to National Legislature 30 

Governance Issues 36 

Re-capitalization of NOCAL and Pursuit of Strategic Goals 36 

Illegal Constitution of NOCAL Board of Directors 38 

Irregularities noted with Board activities 43 

Payment made in Excess of Allotted Amount for Purchase of Motor Vehicles 43 

Unauthorised Purchase of Vehicle for Board Chairman 43 

Variation in Board's Remuneration 44 

Payment of advances to Board Member 44 

Board fees unaccounted for: US$400.00 44 

Irregular payment to Non-Board Members 44 

Unsupported Board Expenditure 45 

Non-Deduction of tax from Board fees 45 

Administrative Matters 49 

No adequate Control over Fuel Coupons 49 

Fuel/Gas procure without following PPC Act 50 

No Contract Agreement/MOU on the supply of Fuel/Gas 50 

Lack of control over Gas/Fuel supply to Utility vehicle 51 

Discrepancies in Vendor Confirmation Relating to Transactions with NOCAL 53 

Procurement of Consultancy Services 55 

Consultancy Agreement with Mwetana Consulting Technology Group 56 

Consultancy Agreement with Cllr. Stephen Dunbar 57 

Consultancy Agreement with Cllr. Peter B. Jallah 58 

Consultancy Agreement COMIE Consultants Inc 58 



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Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Consultancy Agreement with J. Nanborlor F. Singbeh 58 

Consultancy Agreement with Aries Security Service Incorporated 59 

Non Existence of Internal Audit Unit (IAU) 61 

Absence of Financial Regulations and Accounting Manual 62 

Cash and Bank 63 

Maintenance of petty cash policies and related procedures 66 

Safeguarding of Assets within NOCAL 69 

Fixed Assets not appropriately embossed 69 

Insufficient records on Fixed Assets 69 

Vehicles Verification 71 

Irregularities noted with NOCAL's travels 77 

Unsatisfactory Stores Management 83 

Payment of Liability to Unregistered Entity 85 

Financial Matters 86 

Irregularities Noted In Revenue Collection 86 

Operational USD 88 

Hydro Carbon Account 88 

Special Account 89 

Revenue Overstated in the Financial Statements 89 

Irregularities Noted with the Disbursement of Funds 101 

Inter-Ministerial Committee 102 

Post Audit Issues-TGS-NOPEC Payment 105 

Statement of Accountability 107 

Acknowledgement 108 

Schedules 109 

Exhibits 140 



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Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



ACRONYMS USED 



Acronyms 


Meaning 






AOM 


Audit Observation Memorandum 


DN 


Delivery Notes 


DV 


Disbursement Voucher 


GAC 


General Auditing Commission 


GOL 


Government of Liberia 


IA 


Internal Auditor 


IAU 


Internal Audit Unit 


IIA 


Institute of Internal Auditors 


INTOSAI 


International Organization of Supreme Audit Institution 


IPSAS 


International Public Sector Accounting Standards 


MOF 


Ministry of Finance 


NASSCORP 


National Social Security and Welfare Corporation 


NOCAL 


National Oil Company of Liberia 


PPCC 


Public Procurement and Concession Commission 


PU 


Procurement Unit 


RL 


Republic of Liberia 



4 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



EXECUTIVE SUMMARY 

Background 

1. I have audited the accounts and other related records of the National Oil Company of Liberia 
(NOCAL), covering the period 1 July 2006 to 30 June 2008. The audit was commissioned on 15 
October 2008, under the Auditor-General's (AG) statutory mandate as provided for under 
Chapter 53.3 of the 1972 Executive Law of Liberia. The audit is the first audit of the Company's 
accounts by the GAC. 



2. NOCAL was established in April 2000 by the National Legislature, amending the 1972 Executive 
Law of Liberia, to hold all of the right, title and interest of the Republic of Liberia in the 
deposits and reserves of liquid and gaseous hydrocarbons within the territorial limits of Liberia. 
NOCAL is therefore charged with the responsibility to organize, conduct, arrange and supervise 
all relevant research and exploration for liquid and gaseous hydrocarbons in Liberia. 

3. The objective of the audit was to evaluate the effectiveness of internal controls and test critical 
controls over the sales of the 2D Seismic Data, calculation, and reporting processes; the 
reliability and fair presentation of the financial records; integrity of the systems operated by 
NOCAL in discharging its statutory mandate, and whether in practice, the systems had been 
adhered to and efficiently maintained. The audit thus involved reviews as would enable me to 
appropriately report on the attainment of the Company's mandate. Additionally, the review to 
meet the minimal reporting requirements in the Auditor-General's mandate, as spelt out under 
Section 53.7 of the Executive Law of 1972, was undertaken. 



4. In this report, reference to the Auditor General undertaking audit procedures implies that the 
audit work was done under the direction and delegated authority of the Auditor General, and 
the Auditor General has reasonable assurance that the audit work undertaken, has been 
executed in accordance with international standards on auditing as prescribed by the 
International Organization of Supreme Audit Institutions (INTOSAI). 

5. Findings on significant control weaknesses and other lapses were addressed to Management 
initially in the form of Audit Observation Memoranda (AOMs). Responses received on the AOMs 
were evaluated and incorporated in the Draft Management Letter for Management's response 
and attention. Responses were duly evaluated and incorporated into this report verbatim. 
Auditor General's position is indicated to accept or reject management's explanations mainly on 
basis of the evidential matters such as sufficient appropriate documentation, follow-ups on 
responses from management to the Draft Management Letter, and material justifications 
backed by NOCAL's enabling Act and other financial management laws of the Government of 
Liberia. 



Limitation of Responsibility 

6. The systems and management controls operated by NOCAL were reviewed only to the extent 
considered necessary for the effective performance of the audit. As a result, my review may 
not have detected all the weaknesses that existed and my recommendations may not include 
all the improvements that could be made. 

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Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Scope Limitation 

7. The scope of the audit testing was hindered by the Company's inability to provide the general 
ledger records, bank reconciliation statements, notes on the consolidated Financial Statements 
and depreciation schedule of fixed assets. I was therefore unable to ascertain the Company's 
cash position at the close of the fiscal periods. The lack of provisions of the records also made 
it difficult to trace transactions from ledgers to the final accounts and determine the 
composition of line items aggregated in the Financial Statement, and perform analytical review 
procedures to indicate all significant anomalies in the accounts. 

8. The report main findings include: 

• Anomalies noted in NOCAL revenue sharing agreement with TGS-NOPEC; 

• Irregularities noted in NOCAL's Board activities; 

• Lack of implemented and effective internal controls including audit operations within 
NOCAL; 

• Absence of financial and procedures manuals; 

• Discrepancy in reporting revenue accrued; 

• Irregular payment of "lobbying" fees allegedly paid to members of the National 
Legislature, 

• Non remittance of statutory contributions; 

• Irregularities noted with NOCAL's Foreign and local travels; 

• Irregularities noted with NOCAL's procurement; 

• Inappropriate approval of disbursement vouchers; 

• Payment without supporting vouchers; 

• The extent to which the audit was restricted by NOCAL (i.e. scope limitation). 

9. Summaries of the above findings and recommendations are presented hereunder. 

SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS 
Operational Matters 

Liberia 2D Seismic Data Sales: Performance of Sales Contract 

10. Between 2002 and 2007, one Memorandum of Understanding (MOU) and two amendments to 
the MOU, regarding the sale of Liberia 2D Seismic Data, were entered into between the 
National Oil Company of Liberia (NOCAL) and TGS-NOPEC Geophysical Company based in 
Texas, United States of America. Under the MOUs, TGS-NOPEC acquired, processed, and 
interpreted approximately 9,382 kilometres of seismic data from the deep water offshore of 
Liberia. 

11. Under the 2002 MOU, though NOCAL was required to be paid 50% share from proceeds 
generated by the licensing of the seismic data, only 10% share was remitted to NOCAL 
account. As a result, US$305,680.03 covering transactions undertaken from 2002 to 2008 
which accrued to NOCAL was not remitted to NOCAL's account. Inclusive of this amount was 
the miscellaneous receipts associated with sales of 2D Seismic Data, which were not reported 
to NOCAL. Accrued interest thereon (i.e. 14% at CBL rate for lending to commercial banks) as 

6 I Promoting Accountability, Transparency, Integrity and Fiscal Probity i5fl^^ 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



a consequence of TGS-NOPEC withholding of NOCAL's portion of revenue from 2002 to 2007 
was US$42,795.20, thus bringing the amount due NOCAL to US$348,475.23. 

12. Similarly, US$1,034,858.41 payable to NOCAL from the sale of seismic data between 2002 and 
2008 was not remitted to NOCAL until October 2008. Accrued interest on this amount withheld 
(i.e. 14% of unremitted revenue) totalled US$144,880.17. TGS-NOPEC, in a number of 
situations, disregarded the provisions of the MOUs entered into with NOCAL. There was also no 
evidence that NOCAL's Management intervened to make TGS-NOPEC compliant. TGS-NOPEC 
non-compliance would impact the development of the Oil and Gas Industry in the Republic of 
Liberia and thus deny economic benefits that could accrue to the people of Liberia. 

13. Accordingly, I recommend that US$1,655,965.36 (Ref. Annexure 2) being amounts payable to 
NOCAL, including the accrued interest, should be remitted to NOCAL by TGS-NOPEC. 
Additionally, I also discovered two outstanding payments, totalling US$454,000.00, from the 
Revenue Report of TGS-NOPEC and sales invoices submitted by TGS-NOPEC. This amount was 
owed by Mittal Investment and Hong Kong Tai Petroleum International Corporation and has 
been outstanding since 30 June 2008. 

14. NOCAL's Board and Management should supervise and ensure that all provisions contained in 
the NOCAL/TGS-NOPEC MOUs, including the revenue generated from the sales of Liberia's 
Seismic Data, are duly complied with. NOCAL's Management did not provide clarity regarding 
its default in the opening of the Escrow account and revenue remittance by TGS-NOPEC. 

15. TGS-NOPEC has, on account of the audit conducted, remitted US$1,266,102.59 (Ref: Exhibit 
1) out of US$1,655,965.36 assessed by the audit as outstanding revenue since 2002 into 
NOCAL's account and has also made significant improvement in reconciling NOCAL's account 
and remitting the share of revenue due NOCAL promptly. 

Unreliable Accounting Records on Liberia Seismic Data Sales 

16. Records on NOCAL revenue sharing with TGS-NOPEC were found to be inadequate due to 
records not indicating details of revenue generated for each given period with the necessary 
adjustment, including discount allowed and additional fees charged to clients' accounts. The 
records provided revealed summary of revenue amounts year by year with no indication of 
references/ folio numbers, which could lead to omissions, thus providing opportunities for 
manipulation of the records. As a result, it was impracticable to render opinion on the financial 
statements regarding NOCAL's revenue sharing. 

17. I therefore recommend that NOCAL's Management, in its dealings with TGS-NOPEC, should 
establish and insist on transparent processes to ensure that financial records and reports 
regarding NOCAL's revenue sharing are accurate and complete. NOCAL's Management should 
also incorporate in its agreement with TGS-NOPEC on the development of the oil and gas 
industry in the Republic of Liberia, measures to ensure independent review and monitoring of 
accounting and reporting functions, and that these are performed on a regular and timely 
manner. 



7 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Lobbying Fees Paid to the National Legislature 

18. NOCAL Board Chairman, Clemenceau Urey, unilaterally approved the disbursement of an 
amount totalling US$118,400.00 as "Lobbying Fees" to the National Legislature in order to 
ratify petroleum contracts that were pending before the House. Though the Board Chairman 
intimated that the lawmakers requested for such an amount from NOCAL to rapidly ratify the 
contracts, no evidence was provided to justify the claims of the Board's chairman. 

19. Payment of purported lobbying fees to the Legislature is unlawful, and contravenes Section 
12.50(1) of the Penal Law of Liberia which states that "a person has committed bribery, a 
second degree felony, if he knowingly offers, gives or agrees to give to another or solicit, 
accepts or agrees to accept from another, a thing of value as consideration for: (a) The 
recipient's official action as a public servant, or (b)The recipient's violation of a known duty as 
a public servant." 

20. Minutes of NOCAL Board of Directors indicated that the Board was also concerned that 
payment of such amounts to influence the passage of the petroleum contracts of Broadway 
PLC and Oranto Petroleum was irregular, a form of bribery. On this basis, I recommend that 
the US$118,400.00 purportedly paid as lobbying fees be refunded to NOCAL's coffers by 
Alomiza Ennos Barr, Member of the House of Representative, James Kaba, Chief Clerk of the 
House of Representative and Clemenceau B. Urey, Chairman of the Board of Directors of 
NOCAL. Except for a payment received and signed for by Barr in the tune of US$40,000.00 and 
another payment signed for by Chief Clerk Kaba in the tune of US$1,500.00, there was also no 
evidence of receipt by the National Legislature for the sum of US$76,900.00 

21. Additionally, the petroleum contracts of Broadway PLC and Oranto Petroleum Ltd. consequently 
approved should be nullified by the National Legislature due to the process being compromised 
by bribery and thereby denying an assurance that the contracts were ratified for the benefit of 
the Liberian people. Management provided a mere justification that giving funds to the National 
Legislature in a manner not consistent with public sector transparency and accountability was 
"common law practice" in Liberia. This explanation can neither be sustained administratively 
nor judicially when challenged on the merits, as the legislators have denied receiving any 
monies except that I have irrefutable evidence that US$40,000.00 was received by a Legislator 
and US$1,500.00 was received by the Chief Clerk. This was influencing peddling, thus denying 
assurance on value for money in these two contracts ratified and signed into law. 



Governance Issues 



Irregularities noted with Board activities 

22. A number of irregularities were noted with the operations of NOCAL's Board. Inclusive in these 
irregularities was Management's decision to procure a twin cabin-pick-up valued at 
US$34,500.00 for the Board's Chairman. This was an act not supported by NOCAL's guidelines 
or any other policy of the Company. 

23. NOCAL Board made several changes in the fees paid to the Board. Fees paid since 1 July 2006 
to 2008, ranged from US$1,000.00 per quarter in 2006 to US$2,000.00 in 2007 and 

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Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



US$3,000.00 in 2008. It was unclear what considerations underpinned the changes in the 
remuneration. 

24. Additionally, a quarterly allowance of US$ 2,050.00 was paid in advance to a Board member 
contrary to the Act creating NOCAL. The said amount was also wrongly charged to the 
Company's Board expense account instead of a receivable account. It was also noted that 
NOCAL's President/CEO was paid Board remuneration, a benefit not approved by NOCAL's 
Enabling Enactment. Furthermore, Management did not deduct taxes amounting to 
US$10,025.54 (Ref. Annexure 12) from the fees paid to Board members. Taxes were also not 
deducted from the Board's remuneration paid to some senior management staff of the 
Company. 

25. The inability of Management and the Board to adhere to control procedures and provisions 
contained in the Act establishing NOCAL undermined the efficient financial management of the 
Company which impacted the effective implementation of budgeted activities. Accordingly, I 
recommend that Management operates within the existing legal framework insofar as the 
payment of Board remuneration is concerned. NOCAL Board should avoid allotting funds in the 
budget of the Company for unjustified expenditures. The amount of US$10,025.54, being 
income taxes that the Company defaulted in paying to the Government of Liberia, should be 
paid to the Ministry of Finance by Management, as required by the Revenue Code of Liberia, 
2000. The irregular Board remuneration totalling US$12,500 and US$3,100.00 paid to NOCAL's 
President/CEO and other senior personnel respectively should as well be refunded to the 
Company. Note, I did not deduct the income tax on the irregular payments made to the CEO 
and others as they are being held accountable. 

Illegal Constitution of NOCAL Board of Directors, Capitalization and Setting of Strategic 
Goals 

26. Contrary to the provisions of NOCAL Act that the President of Liberia shall appoint the 
Chairman and members of the Board of Directors as well as the President and Chief Executive 
Officer of the Corporation, I observed that it was only the Board Chairman who was appointed 
by the President. The rest of the Board Members were appointed by Morris G. Saytumah, 
Minister of State for Finance and Legal Affairs. 

27. For the appointment of the Chief Executive Officer, Vice Presidents and other Executive Officers 
of NOCAL, the President of Liberia directed that a Search Committee be constituted to effect 
those appointments. However, I did not sight evidence indicating that the Board ever 
constituted the Search Committee to undertake the appointments as directed by the President. 

28. Besides, neither the Management nor the Minister of State for Presidential Affairs, upon 
request, presented evidence to me to show that the current Board took stock of NOCAL's 
performance and set Strategic Goal or Direction for the Company as directed in the President's 
appointment letter of the Board's Chairman. 

29. Additionally, there was no complete documentation on capital injections made by the 
Government of Liberia into the Company since its creation in 2000. My review indicated that so 

9 I Promoting Accountability, Transparency, Integrity and Fiscal Probity f5fln?W. 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



far US$ 326,604.56 had been injected, which exceeded the proposed initial capital of 
US$250,000.00 as stipulated in the Act by US$ 76,604.56. NOCAL was yet to issue to GOL, 
stock certificate as a proof of Government's Investment in the Company. The amount paid by 
Government is also not reflected in the financial statements. 



30. Improper composition of NOCAL Board in consonance with the provisions of NOCAL enabling 
enactment as well as the non-selection and appointment of the Company's President, Vice 
President and Executive Officers on the basis of the President's directive could hamper the 
operations of the Board, Management and by extension the Company. This is because the 
liquid and gaseous hydrocarbon industry is highly technical and therefore NOCAL's Board and 
Management should have the requisite knowledge and technical know-how as necessary for 
the effective, efficient and economic development and exploitation of Liberia liquid and 
gaseous hydrocarbon resources. 

31. Also the Board's failure to produce and submit to the President of the Republic of Liberia, a 
report on Strategic Goal or Direction for NOCAL, constitutes a monumental failure. This is 
because, in my view, such a report is urgently required to inform GOL's decision on early 
development and exploitation of Liberia liquid and gaseous hydrocarbon resources. It was also 
intended to serve as a guide for NOCAL performance over a period of time, thus ensuring that 
funds expended are done consistently with its Strategic Plan. 

32. Furthermore, inaccurate knowledge of GOL investment in NOCAL could be detrimental to the 
Company's interest as well as that of taxpayers' in a situation where the GOL decides to 
pursue joint ventures with other partners for the early development and exploitation of 
Liberia's liquid and gaseous hydrocarbon potential, a trend that is prevailing worldwide. In that 
event, NOCAL's worth may be under-valued. 

33. Accordingly, I recommended, among other things that NOCAL Management should document 
all GoL investments made in NOCAL and issue to GOL stock certificate in line with Section 6 of 
NOCAL's Act. NOCAL Board should also, as a matter of urgency; compile the strategic plan 
requested by the President and through that determine how much by way of injection will be 
required from the GOL or other partners, for the early development and exploitation of Liberia's 
liquid and gaseous hydrocarbon resources. Additionally, a review of the composition of NOCAL 
Board and Management should be made by the President, bringing into the Board and 
Management, Liberians with the requisite skills in liquid and gaseous hydrocarbon development 
and exploitation in line with Section 7 of NOCAL's Act. The appointment of all board members 
should be regularized, with appointment letters duly signed by the President of Liberia as 
indicated in Section 6 of the Act that created NOCAL. 



Administrative Matters 



Irregularities Noted with Procurement of Goods 

34. Fuel Slips/Coupons used within NOCAL were internally printed by the Company and not serially 
pre-numbered. The Human Resource Manager was assigned the sole responsibility of 
managing the Company's fuel supplies in respect to order, custody, handling and distribution of 

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Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



fuel coupons/slips. The process of single management of the fuel supplies made it 
impracticable to verify the quantity of coupons purchased and quantity distributed during the 
period under review. Additionally, in the procurement of fuel/gas for NOCAL, the provision of 
Section 53(a) of the PPC Act of 2005, which requires the use of the quotations and shopping 
method, were not complied with. As a result, procurement was carried out without due 
procedures being adhered to and therefore, I could not provide assurance that value for money 
was achieved in the supplies obtained. 

35. Accordingly, I recommended that Management stop the self printing of its fuel/gas coupons 
and subsequently procure coupons from reputable vendors while also ensuring that coupons 
are serially pre-numbered on both the stub and the coupon. The procurement and distribution 
of coupons should be handled by separate personnel and supplies should be procured 
consistent with the provisions of the PPC Act. 

Management Assistance Plan 

36. Though there was no framework established by the Management of NOCAL to determine the 
nature of assistance that could be granted under its Management Assistance Plan as well as 
thresholds that disbursements on the Programme may be limited to, management paid 
US$5,000.00 to a Senior Geologist of the Company as "assistance for relocation". In 
furtherance of the irregularity noted above, there was also no evidence of related 
documentation accounting for the disbursement. 

37. The granting of assistance to personnel of the Company, not on the basis of a well- 
documented framework approved by NOCAL Board, could provide opportunities for the abuse 
of the Company's funds. As a result, I recommended that Management discontinues the 
Management Assistance Programme, pending the compilation and approval of a well 
documented framework that would govern every aspect of the assistance for re-allocation by 
NOCAL's Board. The framework should also take into consideration, the current financial 
position of the Company. 

Internal Control-Related Issues 

Non-Establishment of Internal Audit Unit within NOCAL 

38. For the period under audit, Internal Audit Department (IAD) was not established within NOCAL. 
An Audit Committee neither existed at the level of NOCAL's Board. As the IAD is an 
independent review mechanism established by Management to oversee the attainment of the 
entity's overall objectives in an orderly, efficient, economic and effective manner, the non- 
existence of an IAD is a drawback to the Company's attainment of its objectives. 

39. I therefore recommended that Management ensures an early establishment of an Internal 
Audit Department under a qualified auditor to supervise the efficient functioning of the 
Department. I supported NOCAL Management's efforts to draft the Terms of Reference for the 
head of the Internal Audit Department. Management is in the process of setting up an IAD. 



11 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Absence of Financial Regulations and Accounting Manual 

40. NOCAL did not provide evidence that it has Financial Regulations and Accounting Manual. The 
manual is required to provide guidance to finance staff in the discharge of their functions. The 
absence of the financial regulations and rules governing the operations of the Company that 
would have outlined procedures, processes and controls for the Company's activities, placed 
the control and management of revenue and disbursement of funds at the discretion and 
personal judgment of Management. This omission also provides opportunity for errors, fraud, 
waste and other malpractices. 

41. Management, in consultation with the Board of Directors, should constitute a committee made 
up of professionals to draft financial rules and regulations for the approval of the Board. 

Non-Compilation of Bank Reconciliation Statements and Inadequate Accounting 
Documentation 

42. NOCAL did not maintain either general or subsidiary ledgers; neither did it compile bank 
reconciliation statements for NOCAL's bank accounts during the period under audit. The non- 
compilation of bank reconciliation statements indicates that irregular dealings of the Company 
through bank may not be promptly uncovered. 

43. The Comptroller has been advised to ensure that the Company's accounts are reconciled 
monthly through the use of bank reconciliation statements and that these statements should 
be reviewed by him and signed off by the Vice President for Finance and Administration. 
Additionally, appropriate ledgers should be considered for use by the Company. 

Accountability for NOCAL Assets 

44. NOCAL assets did not have on them appropriate identifiable markings in the form of numbers 
or code to indicate that the coded items are the properties of the entity. The assets were 
however embossed with removable stickers bearing the Company's name. Assets purchased by 
the Company were also not properly listed in the Fixed Assets Register. Furthermore, there was 
no policy on the disposal of NOCAL's Assets. 

45. Additionally, eight pieces of equipment and nine pieces of furniture listed on NOCAL Fixed 
Assets Listing were not presented for physical verification. Management disposed off five of the 
Company's vehicles without following PPC Act disposal provisions. Management did not provide 
evidence that the process leading to the disposal of government asset as clearly defined under 
Part VII Section 123 and 124 of the PPC Act of 2005 was adhered to. I was, thus, unable to 
provide assurance that the Company's Assets were properly safeguarded and accurately 
disclosed in NOCAL's final accounts. 



46. I recommended therefore that NOCAL General Services Department embark on an exercise to 
emboss all assets of the Company; this exercise should involve the update of the Fixed Assets 
Register with a policy on the disposal of fixed assets instituted by the Board. This will ensure 
that the service potential of the Company's assets is exhausted before replenishment. Also 
Management should provide substantive evidence on the where-about of the five vehicles, 

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Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



eight equipment and nine pieces of furniture pieces which it could not present for physical 
verification. 



Irregularities Noted With Travels 

47. Travel advance payments totalling US$136,584.78 (Ref. Annexure 14) granted to NOCAL 
officials for various assignments outside the city of Monrovia were not retired. Also several 
travels by officials of NOCAL between October 2006 and April 2008 funded at the total cost of 
US$ 13,421.61 were not supported by relevant documentation, such as invitations and 
approval letter of foreign trips, copies of travel documents that were provided including 
boarding passes and used ticket stubs and photocopies of passport could not be matched with 
the payment vouchers provided for audit. The lack of these documents denied assurance that 
travels were actually undertaken by the officials of the company. 

48. Additionally, NOCAL established and used rate of per diem not provided for in the extant 
Executive Ordinance No. 8 for payment of both management personnel and other personnel of 
the Company, who undertook foreign travels during the period under review. In almost all 
cases of foreign travels made from July 2006 to June 2008, NOCAL management did not 
comply with section 54 (1,4) of the PPC Act and Executive Ordinance NO. 8. Management 
bought air tickets from airlines without adhering to the prescribed procedures of obtaining at 
least three (3) quotations from vendors. 

49. Furthermore, by the terms of the contracts entered into with, Oranto Petroleum Ltd and, 
ROPSOL separately, the parties were supposed to fund travel and other related costs of NOCAL 
personnel who travelled to attend meetings held outside Liberia. NOCAL advanced 
US$55,044.05 and US$ 71,080.28 to its personnel attending such meetings on behalf of Oranto 
Petroleum Ltd and ROPSOL respectively. However, these advances were not recovered from 
Oranto Petroleum Ltd and ROPSOL up to the time of audit reporting. 

50. Management's non-compliance with the existing regulatory framework on payment for foreign 
travels would cost the Company substantially and unnecessarily, if the noted lapses were not 
addressed. It is therefore recommended that Management strictly complies with the Guidelines 
and Procedures on Per Diem and Allowances specified in the extant Executive Ordinance No. 8 
and 9 issued by the Government of Liberia. The President and Vice- Presidents of the Company 
are also required to produce approval of their foreign trips by the Board; all costs of 
unapproved trips should be borne by the officials involved and not charged to the Company's 
account. Oranto Petroleum Ltd and ROPSOL should also refund US$55,044.05 and US$ 
71,080.28 respectively to NOCAL, being travel advances to NOCAL personnel, which they were 
under obligation to meet. 



Financial Matters 



Discrepancies in Reported Revenue 

51. Three bank accounts maintained by NOCAL at Ecobank for 2006/2007 fiscal year indicated that 
NOCAL had total revenue collections of US$1,059,185.61 as opposed to the US$742,339.92 
reported in the 2006/7 Income Statement, thus reflecting a variance of US$ 316,845.69. 

13 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

Similarly, my analysis of revenues for 2007/8 fiscal year revealed total revenue of 
US$3,200,438.30; NOCAL, however, reported US$ 2,627,081.23 for 2007/8, again resulting to 
a variance of US$ 573,357.07 of under-reporting. Ref: Exhibit 6 

52. Similar discrepancies were noted with GOL subsidy to NOCAL, receipts from TGS-NOPEC and 
Miscellaneous Revenue in the financial statements. GOL subsidies to NOCAL and receipts from 
TGS-NOPEC were reported in the financial statements as US$154,705.21 and US$8,568.51, 
instead of US$154,281.64 and US$5,408.54 respectively. Because management did not use 
CBL exchange rate between the LD and US$, GOL Subsidy to NOCAL was under-stated by 
US$7,324.87 in the financial statements. Furthermore, US$5,000.00 collected from Broadway 
Consolidated PLC as reception presentation fees were not reported in the final accounts of the 
Company. 

53. Inconsistencies in records of revenue collections, as exemplified by revenues reported in the 
Income Statements for the fiscal years 2006/7 and 2007/8 being different from revenues 
attained and derived from bank statements and other source documents. These omissions on 
the part of the Management are indication that there were material misstatements in NOCAL 
revenue reported. I therefore recommended, among other things that NOCAL Management set 
up a task force to investigate each and every anomaly conveyed in this report, document every 
discrepancy arising from the investigation and pursue the noted discrepancies to their logical 
conclusion. The outcomes from the investigation should be used to update related accounts 
and the financial statements. The outcomes from the investigation should be conveyed to the 
Auditor-General, including the investigation documentation. 

Personnel-Related Costs Reported in Financial Statements. 

54. Analysis of NOCAL's budget and financial statements for the periods under review indicated 
that payroll costs were not supported by records substantiating the payments. Additionally, 
US$38,610.00 and US$42,350.00 paid as allowances to employees in 2006/2007 and 
2007/2008 respectively, were not reflected in the financial statements, despite being budgeted 
for. Also Social Security contributions amounting to US$1,365.35 withheld from July 2006 - 
January 2007 were not remitted to NASSCORP, but were later refunded to the employees that 
had contributed to the Social Security scheme. 

55. Income taxes deducted from employees between July 2006-June 2007 and July 2007-June 
2008 were also not promptly remitted to the Ministry of Finance as required by the Revenue 
code. I noted 10 months of delay in remitting withholding taxes to the Ministry of Finance. 
Unpaid Income Taxes which amounted to US$4,313.30 due the Government of Liberia for the 
period of July 2006 to June 2008 was still outstanding at the time of reporting. There is a 
potential risk that, the employees of NOCAL might not derive their retirement benefits due to 
Non-payment and deductions of Social Security contributions from employee's monthly earning 
by Management. The delay and non-payment of Withholding Taxes on the timely basis could 
also deny GOL of the required revenues which may also cause NOCAL to pay unnecessary 
penalty for late payment. 



14 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



56. On account of the foregoing, it is recommended that Management should strengthen 
supervisory and managerial controls over the accounting function, to ensure its accuracy and 
completeness. Also NOCAL should immediately remit the withheld income tax to the Ministry of 
Finance, including the necessary penalty for late payment. Management should avoid the late 
payment of withholding tax and promptly remit Social Security deduction to NASSCORP. 



Disbursements without Authority 

57. US$41,980.07 paid to the General Revenue Account of the GOL, representing customs charges, 
was not approved by the appropriate authorities and supported by relevant disbursement 
vouchers (DVs). During the two fiscal years under review, a total of US$54,172.45 was 
expended without relevant DVs supporting the expenditures. Also, contrary to NOCAL 
established procedures, disbursements totalling US$32,034.79 & L$2,470.00 were made 
without the approval of the President of NOCAL. 

58. NOCAL transactions' non-conformity with established procedures and absence of DVs to 
support expenditures denied assurance on the validity of transactions undertaken accordingly; 
Management is advised to strictly adhere to control procedures regarding the certification and 
approval of DVs. 

Statement of Accountability 

59. Section 53.7 of the Executive Law of 1972 provides the minimal reporting requirement. It 
mandates me to report the following: 

• Any officer or employee who has wilfully or negligently failed to collect or receive monies 
belonging to the Government. 

• Any public monies not duly accounted for and paid into an authorized depository. 

• Any appropriation that was exceeded or applied to a purpose or in manner not 
authorized by law. 

• Any deficiency or loss through fraud, default or mistake of any person. 

• Inadequate or ineffective internal control of public monies and assets. When appropriate, 
the report shall also include recommendations for executive action or legislation deemed 
necessary to improve the receipt, custody, accounting and disbursement of public 
monies and other assets. 



60. Overall, both financial and administrative activities undertaken by NOCAL's Management during 
the period under review were characterized by a number of financial irregularities and control 
deficiencies. The irregularities noted amounted to US$406,384.26 and L$15,315.00. The 
irregularities noted were derived from irregular payments on foreign travels, Board expenses, 
lobbying fees and unreported revenues as well as anomalies in the procurement of goods and 
services undertaken by management. This amount does not include the US$1,266,102.59 to be 
restituted by TGS-NOPAL. 

15 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

DETAILED REPORT 

Introduction 

61. I have audited the accounts and other related records of NOCAL covering the period July 1, 
2006 to June 30, 2008. The audit was commissioned on October 15, 2008 under my statutory 
mandate as provided for under Chapter 53.3 of the Executive Law of Liberia of 1972. Since its 
establishment nine (9) years ago, this is the first audit of the Company's accounts by the GAC. 

Background of NOCAL 

62. NOCAL was established in April 2000 by an Act of the National Legislature, amending the 1972 
Executive Law of Liberia to hold all of the right, title and interest of the Republic of Liberia in 
the deposits and reserves of liquid and gaseous hydrocarbons within the territorial limits of 
Liberia; whether potential, proven, or actual with the aim of facilitating the development of the 
oil and gas industry in Liberia. 

63. The functions of NOCAL are to organize, conduct, arrange, and supervise all relevant research 
and exploration for liquid and gaseous hydrocarbons in Liberia. It also conducts research and 
undertakes planning for the orderly, rational and optimized development of petroleum and the 
energy requirement of Liberia. 

Management Personnel 

64. For the periods under audit, NOCAL had a seven-member Board with Clemenceau B. Urey, Sr. 
as its Chairperson. The following senior management personnel handled the administrative and 
financial affairs of the Company during the periods: 



Table 1: Senior Management Personnel of NOCAL for the Period under Audit 



No. 


Name 


Position 


Periods 


i. 


Dr. Fodee Kromah 


President/CEO 


April 2006-present 


ii. 


Marie E. Leigh-Parker 


Vice President for Admin. & Finance 


April 2006-present 


iii. 


Jacob S. Sandikie 


Vice President for Technical Services 


April 2006-present 


iv. 


Fulton D. Reeves 


Comptroller 


Sept.2006-present 



Scope and Objective of the Audit 

65. The audit objectives are: 



• Identifying the main sources of revenue of the Company, ensuring that all inflows 
accruing to the Company within the periods under review were accounted for. 

• Determining share of revenues receivable from various Oil Companies, ensuring that 
revenue shared were in accordance with the terms of the contract/MOU signed by 
NOCAL and the Oil Companies. 

• Ascertaining that expenditure incurred by the Company during the period under 
review was valid and disbursed in accordance with the objectives of NOCAL. 



16 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



• Determining that material procurements undertaken by the Company were in 
accordance with the provisions of the Public Procurement and Concession (PPC) Act, 
2005. 

• Ascertaining whether procedures pursued by the Company ensured due safeguarding 
of its assets, the accuracy and reliability of its financial records, orderly and efficient 
operations as well as prompt reporting of deviations and irregularities. 

• Determining if the accounts maintained by NOCAL and the financial statements 
derived there-from are in accordance with Generally Accepted Accounting Principles 
(GAAP) and the enabling Act of NOCAL. 

Audit Methodology 

66. I conducted the audit in accordance with auditing standards of the International Organization 
of Supreme Audit Institutions (INTOSAI). These standards require me to obtain reasonable 
assurance that the financial statements are fairly presented. 

67. I adopted a risk-based approach. During the planning process, I assessed the legal, business 
and control environment of NOCAL through which inherent and control risks impacting the 
Company's operations were identified. The audit methodology was thus chosen to address the 
risks identified with NOCAL's operations. The methods used included: 

• Documentation review; 

• Interviews; 

• Ascertainment and evaluation of relevant systems and controls; and 

• Substantive, compliance and analytical review procedures. 

68. I conducted interviews with key officers of the Company to ascertain the extent of compliance 
in the application of procedures outlined in the following referenced materials and related 
regulations: 

NOCAL Enabling Enactment; 
Revenue Code of Liberia 2000; 
Government Executive Travel Ordinance 8 & 9; 
PPC Act 2005; and 

Standard Operational Procedures of NOCAL. 

69. I also carried out a walkthrough and functional tests to confirm and ascertain the effectiveness 
of systems, control procedures and policies. Where deviations were noted, their impact on the 
controls were assessed and factored into the audit programs. 

70. Substantive tests were performed to ascertain the reliability and accuracy of assertions made in 
the financial statements. These were carried out on the basis of risk analysis and involved the 
checking of individual transactions. 

17 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

71. As the auditor of NOCAL, it is my responsibility to provide stakeholders with reasonable 
assurance as to the validity of assets owned by the Company. To this end, I conducted physical 
inspection of the Company's Long Term Assets. 

72. I sent a team of auditors to Houston, Texas, twice to conduct this audit, including the 
examination of the extent of compliance with contractual arrangements between TGS-NOPEC 
and NOCAL. 

73. As part of my reporting procedures, audit findings were first discussed with desk officers and 
their supervising officers and where appropriate, Audit Observation Memoranda were sent to 
the Vice President for Administration & Finance and copied to the President/CEO. I also 
submitted for management's response, the Draft Management Letter. The responses from 
desk officers and Management have been duly evaluated and incorporated in this final report. 

Scope Limitation 

74. The audit was hindered by the company's inability to provide me with the general ledger 
records, bank reconciliation statements, notes on the consolidated Financial Statements, and 
depreciation schedule of fixed assets. I was therefore unable to ascertain the Company's cash 
position at the close of the fiscal periods, trace transactions from ledgers to the final accounts, 
determine the composition of line items aggregated in the Financial Statements, and perform 
detail analytical reviews. 

Limitation of Responsibility 

75. I reviewed the systems and management controls operated by NOCAL only to the extent I 
considered necessary for the effective performance of this audit. As a result, my review may 
not have detected all weaknesses that existed and my recommendations may not include all 
improvements that could be made. I have prepared this report solely for the use of the Board 
of NOCAL, the president of Republic Liberia and the National Legislatures for policy and 
administrative actions. It is therefore a public document. 

76. Moreover, the responsibility to ensure effective systems and controls for operational efficiency 
and for the prevention and detection of fraud, compliance with Government of Liberia extant 
laws and regulations, and to ensure that all information is made available for audit rested with 
NOCAL's Management. 

77. My responsibility was to report thereon. That is, to provide assurance that all dealings of the 
Company had been carried out in accordance with extant laws, regulations, laid down policies 
and procedures for the purposes intended and financial transactions were properly accounted 
for. 

78. I have endeavoured to hold officers accountable for the period under audit in accordance with 
section 53.7 of the 1972 Executive Law. Section 53.7 (d) stipulates that I should hold 
accountable any person who has caused a deficiency or loss through fraud, default or mistake. 



18 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



DETAILED FINDINGS AND RECOMMENDATIONS 

Operational Matters 

Liberia 2D Seismic Data Sales: Performance of Sales Contract 
Observation 

79. Between 2002 and 2007, one Memorandum of Understanding (MOU) and two amendments 
regarding the sale of Liberia 2D Seismic data were entered into by and between the National 
Oil Company of Liberia (NOCAL) and TGS-NOPEC Geophysical Company based in Texas, United 
States of America. Under the auspices of NOCAL, TGS-NOPEC acquired, processed, and 
interpreted approximately 9,382 kilometres of 2D seismic data from the deep water offshore of 
Liberia. 

80. Under the first MOU dated 30th November 2002, TGS-NOPEC was authorized to market the 
data, pursuant to the terms and conditions agreed upon by both parties. Relevant sections of 
this agreement are stated hereunder: 

• TGS-NOPEC shall acquire all data in Liberia waters owned by NOCAL and TGS-NOPEC 
shall be reimbursed in the amount of US$6,400,000.00 for the costs associated with 
the seismic survey, data acquisition, and marketing. 

• Upon full payment and or reimbursement of US$6,400,000.00, the entire data, in 
either electronic or physical form, and all copies thereof in the possession of TGS- 
NOPEC, together with the right to market same shall be immediately delivered to 
NOCAL. 



• The amount of US$6,400,000.00 shall be paid to TGS-NOPEC at the conclusion of the 
acquisition, processing and interpretation of the data, primarily from proceeds 
generated by the licensing of the seismic data, in the form and manner as follows: 



NOCAL 


TGS-NOPEC 


50% 


50% 



• If TGS's share of 50% of the total sales realized does not complete the payment of 
the US$6,400,000.00 owed to TGS-NOPEC within the period of (12) months of the 
date of signature of the MOU, then NOCAL shall pay and underwrite the balance not 
covered. 



• TGS-NOPEC shall assist NOCAL in contracting the services of qualified consultants in 
drafting or reviewing of Liberia's Petroleum Code and Production Sharing Contracts 
(PSC) in order to make same consistent with internationally accepted standards. 
TGS-NOPEC shall pay all agreed fees of such consultants directly to the consultants, 
on behalf of NOCAL, with the cost of consultancy fees being inclusive of the 
US$6,400,000.00 compensation to TGS-NOPEC. 



19 Promoting Accountability, Transparency, Integrity and Fiscal Probity 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



• As part of the US$6,400,000.00 compensation to TGS-NOPEC, TGS-NOPEC shall at 
the direction of and in consultation with NOCAL, prepare and arrange the 
organization of the presentation of Liberia's data and the bid rounds to the 
International Oil and Gas Exploration and Production Industry. 

• The cost associated with the two (2) conferences or presentation to be held in 
London and Houston, USA, which is inclusive of the US$6,400,000.00, shall be borne 
by TGS-NOPEC. 

81. The second MOU dated 27 January 2004, though similar to the provisions of the first 
agreement/MOU, had the following amendments: 

• TGS-NOPEC and NOCAL agreed to create an Escrow Account in the name of NOCAL 
into which NOCAL's 50% share of each SALE shall be deposited. NOCAL shall be 
allowed to request from TGS-NOPEC withdrawal of its monthly operating expenses 
from the said Escrow Account, which shall, under no conditions, exceed withdrawal 
of more than US$60,000.00 in any one given month. 

• If TGS-NOPEC is not paid the full sum of US$6,400,000.00 through its 50% share of 
all SALES by 30 November 2004, the balance in the Escrow Account shall be paid to 
TGS-NOPEC and all SALES shall be split 90%/10% in favour of TGS-NOPEC until 
TGS-NOPEC's full amount of US$6,400,000.00 is recouped. 

82. Ultimately, the MOU dated 27 January 2004 was later amended on 26 November 2007 and 
contained the following in its scope: 

• TGS-NOPEC/NOCAL shall charge the clients a survey management fee of 15% on the 
total cost of the survey which would be shared 60%-TGS-NOPEC, 40%-NOCAL. 

• Data Trading Fee of US$500.00 per Sq. km/company and Companies licensing data 
outside of their permit shall be charged on an Open Block Licensing Fee of 
US$2,000.00/sq.km. 

• Trading, Licensing, Open Block Licensing and all other fees received by TGS shall be 
shared 40%-NOCAL; 60%-TGS-NOPEC. 

• TGS-NOPEC shall advance the sum of US$250,000.00 per month to NOCAL, for the 
period of twenty four (24) months. TGS will recover this advance without interest 
from NOCAL's share of the survey management fee at the rate agreed upon by both 
parties. 

83. On the basis of the above, I have examined TGS-NOPEC financial records, including 
supplementary agreement for license of geophysical data, invoices and bank withdrawals and 
debits, pertaining to the sale of Liberia's Seismic Data during the periods under review. My 
examination revealed a number of omissions that are considered below. 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



NOCAL Share of Revenue Under-remitted 

84. Though the 2002 MOU provided that NOCAL shall be paid 50% share of proceeds generated by 
the licensing of the seismic data, it was observed that a 10% share instead was remitted to 
NOCAL account. As a result, US$305,680.03 covering transactions undertaken from 2002 to 
2008 payable to NOCAL had not been remitted to NOCAL. 

85. Inclusive of this amount was the miscellaneous receipts associated with the sales of seismic 
data, which were not reported to NOCAL. It was also determined that in line with best 
business practice , the payable amount should have accrued an interest of US$42,795.20 
thereon (i.e. 14%, the lending rate of CBL for commercial banks) as a consequence of TGS- 
NOPEC withholding of NOCAL portion of revenue from 2002 to 2008, thus increasing the 
amount due to NOCAL to US$348,475.23. Ref: Annexure 3A 



86. On the basis of the above, it is concluded that TGS-NOPEC disregarded the provisions of the 
MOUs which were intended to facilitate the development of the Oil and Gas Industry in the 
Republic of Liberia thereby accruing economic benefits for the country. 

Delay in Remittance of US$1,034,858.31 to NOCAL 

87. It was observed from the review of cash receipts and bank transactions/advices that TGS- 
NOPEC failed to remit to NOCAL, its share of revenue amounting to US$1,034,858.31 based on 
the provisions of the agreements. According to TGS-NOPEC and based on calculations 
authenticated by the audit, US$1,928,956.50 was realized by NOCAL from the sales of 2D 
seismic data during the period 2002 to 2008 on the basis of the provisions of the MOU. Of this 
amount, TGS-NOPEC remitted US$894,098.09 to NOCAL from November 2003 through 
December 2007, thus leaving an unexplained difference of US$1,034,858.41. 

88. My review further indicated that though TGS-NOPEC failed to remit the revenues as they were 
due, the balance of US$1,034,858.31 was later remitted to NOCAL in October 2008 without the 
accrued interest. The implication is that TGS-NOPEC did not remit NOCAL share into the Escrow 
account as required by the MOU and NOCAL revenue was retained by TGS-NOPEC. Therefore, 
TGS-NOPEC shall be required to pay interest on the US$1,034,858.31 (i.e. 14% of unremitted 
revenue); the accrued interest amounted to US$144,880.17 as charges for withholding 
NOCAL's share of revenue from the sales of the 2D seismic data. 



New Revenue Sharing Fee Established Without Formal Agreement 

89. Further review of records indicated that both TGS-NOPEC and NOCAL did not draw up an 
agreement that would have amended the section regarding revenue sharing of the 2004 
agreement when the agreement had expired and the provision for the division of resources in 
favour of TGS-NOPEC was nullified. 



90. Financial transaction, with legal implication that is undertaken on behalf of the Government, 
shall clearly have the terms and conditions mutually understood and agreed by the parties. It 
must be binding and supported by a formal agreement (Memorandum of Understanding), as 
this would avoid the possibility of inequity in the distribution of revenue. 



21 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



91. There was no evidence of a further agreement following the expiration of the 2004 agreement. 
However, it was observed from a letter dated 4 December 2008 bearing the signature of the 
CEO of NOCAL, Dr. Fodee Kromah, that though TGS-NOPEC was instructed to forward NOCAL 
60% as was agreed upon, there was no evidence of an agreement on which the 60% share of 
revenue was established. Exhibit 3. 



92. For purpose of validating the revenue sharing (distribution) between NOCAL and TGS-NOPEC, 
additional records/ information beside the letter provided to the audit team was requested. The 
verbal response received was that "there are no records. TGS-NOPEC management executed a 
verbal arrangement with NOCAL President/CEO in respect of the distribution of revenue 
generated from the sales of Liberia's Seismic data through a telephone conversation". This was 
the response of Edward Neese, the Vice President of TGS-NOPEC. 

93. The instruction of the President/CEO of NOCAL which allowed TGS-NOPEC to collect 40% share 
of revenue from the account of NOCAL without a formal agreement being approved by the 
Board of NOCAL with the consent of the President of Liberia does not conform to a prudent 
means of formal agreement. NOCAL's Enabling Enactment explicitly vests such power in the 
Board. 



94. Following the fact that the 60%:40% distribution of revenue was made without a formal 
agreement, the following was assessed based on the letter from the President of NOCAL: 

• The amount of US$799,301.00 was analysed (i.e. revenue generated after the 
expiration of the 2004 agreement) as indicated in the Ref. Annexure 3B. The 
analysis revealed that an additional amount of US$264,650.50 was due NOCAL, 
which should be remitted to NOCAL's account. 



• An outstanding sales made to a customer in the amount of US$135,000.00 was also 
analysed as indicated in Ref. Annexure 3B.The outcome of the analysis produced a 
variance of US$67,500.00 also due to NOCAL. This should be remitted into NOCAL 
account pending its collection from the customer by TGS-NOPEC. 

95. Moreover, considering NOCAL as a public entity, the regularity of its operations is very critical. 
It is worth noting that all economic benefit accruing to NOCAL are essential for facilitating the 
development of the oil and gas industry in the Republic of Liberia. This explains why the 
provision on the determination of revenue distribution in respect of sales generated from the 
licensing and marketing of Liberia's Seismic data payable to TGS-NOPEC must be thoroughly 
reviewed and duly approved and documented as a formal agreement and not on the basis of a 
verbal agreement. Thus, this aberration should be addressed in order to avoid NOCAL, and 
indeed GOL, losing the required revenue from the sales of the 2D Seismic Data. 



TGS-NOPEC and NOCAL Failure to Establish Escrow Account per MOU 

96. As indicated earlier, TGS-NOPEC and NOCAL agreed to create an Escrow Account in the name 
of NOCAL into which NOCAL's 50% share of each SALE shall be deposited. Contrary to the 
provision above, it was observed that TGS-NOPEC and NOCAL did not establish the Escrow 

22 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Account which would have allowed NOCAL to draw on its monthly operating revenue, which 
was not allowed to exceed US$60,000.00 in any given month. 

97. The reason regarding the establishment of the escrow is to monitor the movements of funds 
within the account, thereby strengthening related internal controls. It is worth noting that, 
though the Escrow account was not opened, NOCAL Board and Management did not raise any 
issue with TGS-NOPEC. 



Outstanding Revenues through TGS-NOPEC to NOCAL (US$454,000.00) 

98. The audit team also discovered two outstanding payments, totalling US$454,000.00, from the 
Revenue Report of TGS-NOPEC and sales invoices submitted by TGS-NOPEC. This amount was 
owed by Mittal Investment and Hong Kong Tai Petroleum International Corporation and it was 
supposed to have been collected by TGS-NOPEC and remitted to NOCAL. Hong Kong Tai 
Petroleum owed US$400,000.00 of the amount outstanding whilst Mittal Investment 
indebtedness stood at US$54,000. The Hong Kong Tai Petroleum indebtedness had been 
outstanding since 26 September 2008 while that for Mittal Investment since 30 June 2008. 

Risk 

99. Non-compliance with the provisions in the MOU could lead to litigation that would undermine 
the effective execution of NOCAL's strategic goals, as NOCAL Board's and Management's time 
would be consumed on efforts to remedy the non-compliance. 

100. Management's failure to diligently review the MOU and ensure compliance by the TGS-NOPEC 
could also result in under-remittance of NOCAL's share of revenues, thus increasing the 
opportunity cost for best alternative use of the funds. 

101. Verbal agreements could have been made for the sole personal benefit of the CEO in the form 
of kickbacks. 



Recommendation 

102. The balance of revenue payable to NOCAL in the amount of US$493,355.23 (derived from 
US$305,680.03, representing NOCAL's Share of unremitted revenue and earned interest 
amounting US$42,795.20 and US$144,880.17, representing accrued interest as a result of 
delay in remitting of NOCAL's Share of the revenue by TGS-NOPEC for the period 2002 - 2008) 
should be remitted into NOCAL's Account by TGS-NOPEC. 



103. The Board of Directors through the President/CEO of NOCAL should ensure that the 
US$454,000.00 is collected by TGS-NOPEC from Mittal Investment and Hong Kong Tai 
Petroleum and remitted to NOCAL, with a copy of the payment sent to the General Auditing 
Commission within 45 days of receipt of this report. 



104. NOCAL Board and CEO should examine and ensure that all provisions contained in the 
NOCAL/TGS-NOPEC MOU, including the revenue generated from the sales of Liberia's Seismic 
Data, are duly complied with. 

23 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



105. Dr. Fodee Kromah, CEO of NOCAL should be held accountable as he did not provide 
substantive justification for allowing TGS-NOPEC to operate on a verbal agreement that 
required the sale of the seismic data on a 60:40 percentage basis. This is supported by the fact 
that Dr. Kromah, President of NOCAL instructed (based on a letter dated 3 October 2006) TGS- 
NOPEC to forward NOCAL's 60 percent share of the revenue. This confirms that Dr. Kromah 
was aware and did unilaterally enter into a verbal agreement with TGS-NOPEC, thus avoiding 
the authority of the Board of Directors and the consent of the President of the Republic of 
Liberia. The unilateral decision by Dr. Kromah to enter into a verbal agreement with TGS- 
NOPEC contravened provisions of the Act creating NOCAL, thus undermining the agreement. 

106. TGS-NOPEC is required to remit to the account of NOCAL its share of 40% (US$ 398,106.15) of 
revenue generated without a formal agreement, pending the approval of an appropriate 
compensation for the storage of Liberia 2D Seismic Data by the Board in consultation with the 
President of Liberia as required by the Company's enabling enactment. This requires a formal 
agreement drawn by the Board that would indicate TGS' share of revenue following the 
recouping of US$6.4 million paid for data acquisition and marketing. 

107. Dr. Fodee Kromah, the CEO, and the of Board of Directors of NOCAL should be held 
responsible for failing to open the Escrow Account as defined by the Agreement between 
NOCAL and TGS-NOPEC. The Board and Management of NOCAL should ensure the prompt 
opening of the Escrow Account and all remittances due NOCAL from TGS-NOPEC should be 
therein deposited. 

TGS-NOPEC's Failure to Provide Accurate and Complete Underlying Accounting Records 
Observation 

108. Ledgers are at the heart of an entity's financial management, accounting and reporting system. 
It ensures accurate and reliable accounting records which facilitate the timely preparation and 
presentation of financial statements to stakeholders. Without general and subsidiary ledgers, it 
will be nearly impossible to prepare a trial balance and subsequently, financial statements that 
could be used to evaluate the validity and completeness of revenue reported for NOCAL. While 
general ledgers contain a summary of all transactions and control of the various subsidiary 
ledgers, sales journal provide details of all transactions of sales undertaken during a specific 
period. 

109. On the basis of the above, TGS was requested to provide its general ledgers and related 
subsidiary records regarding the sales of Liberia's 2D Seismic Data to facilitate the validation of 
revenue generated from the 2D sale as reported in the revenue distribution Report of NOCAL 
and TGS-NOPEC consolidated financial statements. 



110. In January 2009, my team of auditors went to Houston, Texas, USA and requested to examine 
the ledgers and subsidiary ledgers of TGS-NOPEC. TGS-NOPEC declined to provide access. On 
the second visit to Houston, TGS-NOPEC obliged and provided a set of records in electronic 
format, namely external revenues summaries for the periods, 2003, 2004, 2005, 2006, 2007 
and 2008, and actual posted period transaction listing (records for 2002 were not provided). 

24 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

111. The records received from TGS-NOPEC were inadequate and incomplete. The audit of TGS- 
NOPEC records regarding the distribution of revenue with NOCAL was not possible because the 
records received from the management of TGS-NOPEC did not indicate the details of the 
revenue generated for each given period, including the necessary adjustments that would have 
provided for discounts allowed and additional fees charged to the accounts of the various 
clients in the ledger. 

112. The records provided also revealed summary of yearly revenue amount with no indication of 
references/ folios numbers, etc. These omissions could lead to a manipulation of the records. 
TGS-NOPEC when requested for the detailed account balances of the revenue distribution for 
the periods 2002 to 2008, including the journal entry of transaction data, provided a listing of 
client names, amounts and the period's accounts electronically posted on a sheet of paper 
without the necessary notes stating how the revenue shared was linked to the account 
balances. 

113. Additionally, the aggregate account balances of the revenue distribution on the general ledgers 
submitted did not tally with the figures shown on the financial statements. TGS-NOPEC Vice 
President, Edward Neese, when queried on the variances, indicated that the company's 
consolidated final accounts were prepared at the Head office of TGS-NOPEC in Norway and 
that other revenue from different sources were incorporated in the revenue sharing account. 

114. TGS-NOPEC report on Revenue sharing covering the period September 2002 through June 
2008 indicated that total sales of the seismic data came to US$9,290,853.42. However, the 
sales could not be substantiated without first reviewing the underlying records to the report, 
which were not made available to my team of auditors. Furthermore, records showing the 
reconciliation of a sale amounting to US$14,829.40 generated on 17 September 2002 could not 
be provided for validation. As a result, I was unable to render opinion on the financial 
statements regarding the completeness of the revenue distribution of NOCAL. 

115. As the External Auditor of NOCAL, my auditors were required to evaluate the evidence 
supporting the preparation of financial statements of TGS-NOPEC with regard to revenue 
generated from licensing Liberia's Seismic Data. Thus, TGS-NOPEC Vice -President, Edward 
Neese, contented that TGS-NOPEC could not provide the general ledger and other related 
records to my auditors on grounds that these records had financial information belonging to 
other countries and that disclosing such information to my auditors was inappropriate on his 
part. I also noted that some of the figures on one of the invoices and related documents were 
erased and tainted and this made the substantiation of revenue amount of US$9,290,853.42 
reported in TGS-NOPEC revenue sharing report without looking at its underlying records 
impracticable. 

Risk 

116. Prolonged delays in the collection and remittance of revenue could increase the risk of non- 
payments, thereby denying NOCAL the needed revenues to finance its operations. 



25 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



117. TGS refusal to provide the underlying records seems to portray lack of transparency in its 
dealings with NOCAL. Why the Board and Management of NOCAL had permitted the 
occurrence of such dealings was unclear, as it had been evident to the Board and Management 
that such dealings by TGS-NOPEC would be financially detrimental to the Company. The 
revenue reports compiled by TGS as generated through the sales of the seismic data was 
incomplete and could not be reliable. 

118. The inability to provide the general ledger and other financial records did have an impact on 
the audit work in determining the actual revenue generated from the sales of Liberia 2D 
Seismic Data. The omission could mislead NOCAL (owner of the Seismic Data), and thus impair 
its ability to determine the total revenues realized from the Seismic Data sale. 

119. The omissions noted above would impact the reporting of NOCAL's operational results and 
financial position for the periods under review. 

Recommendation 

120. NOCAL President and CEO, in dealings with TGS-NOPEC, should establish and adhere to 
transparent processes in order to ensure that financial records and reports regarding NOCAL's 
revenue sharing with TGS are accurate and complete. 

121. NOCAL President and CEO should consider in its agreement with TGS-NOPEC, regarding the 
development of the oil and gas industry in the Republic of Liberia, measures that would ensure 
an independent review and monitoring of accounting and reporting functions. This should be 
carried out in a timely and regular manner. 

122. TGS-NOPEC should comply with the audit provisions contained in the MOU by providing the 
financial records required for the audit. The Board of Directors should nullify the agreement 
with TGS-NOPEC if it continued to refuse to provide the underlying ledgers and records to truly 
determine NOCAL share of revenue generated by TGS-NOPEC. 

123. NOCAL Vice President for Finance should provide adequate supervision for staff involved in the 
recording of transactions so as to provide assurance on the reliability of the Company's 
financial reporting. 

124. The necessary corrections to the omissions observed above should be made in the Statement 
of Revenue within 30 days upon receipt of this report. 

Management's Response (TGS-NOPEC) 

125. We disagree with this finding. The operation agreement use in determining the appropriate 
revenue share for Liberia is the MOU dated January 27, 2004 C2204 MOU") which replaces the 
MOU dated November 30, 2002. In the 2004 MOU, it states "NOCAL and TGS-NOPEC agree 
that if TGS-NOPEC is not paid the full sum of US$6. 4 million through its 50% share of all SALES 
by November 30, 2004, then the balance in the Escrow Account shall be paid to TGS-NOPEC 
and all SALES shall be split 90%/10% in favour of TGS-NOPEC until TGS-NOPECs full US$6.4 
million is recouped. " 

26 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



126. The issue is whether the 90%/10% revenue spilt in favour of TGS-NOPEC is applied to "all 
SALES" including the sales going back in time to the very first sale made by TGS-NOPEC in 
2002 or on sales going forward from November 30, 2004. In the sentence quoted above from 
the 2004 MOU, the term "all sales" is used specifically to define the sales up and through 
November 30, 2004." 

127. The sentence then later states that "all SALES shall be spilt 90%/10% in favour of TGS- 
NOPEC. "Because the same term is used in both places, it is correct to apply the 90%/10% to 
"SALES" made prior to November 30, 2004 as well as "all Sales" going forward. This conclusion 
is supporting by the part of the quoted sentence where both parties agreed that the amount 
prior to November 30, 2004 that were segregated into the Escrow Account for NOCAL s benefit 
using the 50%/50% revenue sharing "shall be paid to TGS-NOPEC". If the sales prior to 
November 30, 2004 were to remain at the 50% / 50% split and only future sales were to be at 
the 90%o / 10% split, then it would have been illogical for the parties to agree to pay TGS- 
NOPEC any portion of the Escrow Account. 

128. For purposes of revenue sharing, the 2004 MOU defines SALES as "the price per kilometre that 
a client pays for the license of the data. " Tape Copy, Product Charges, Report and Wells Log 
revenue are not included in the definition of a SALE. Further, the US$6.4 million to be 
recovered was for "the costs associated with the seismic survey, data acquisition, processing, 
interpretation and marketing. " The costs to provide these services were outside of the defined 
cost to be covered by the revenue sharing and thus, are 100%o recoverable by TGS-NOPEC. 

129. The 2004 MOU makes no provisions for either party earning interest on any balance owed by 
either party. Further, from November 2004 through December 2007, TGS-NOPEC had 
advanced more money to NOCAL than what NOCAL should have received from its 10%> share 
of revenue. Thus, if there were to be interest paid, TGS-NOPEC would earn the 14%> rate on 
the advances to NOCAL in this time period. 

130. For most of 2008, TGS-NOPEC and NOCAL were negotiating on the appropriate level of 
revenue sharing for sales that occurred subsequent to TGS-NOPEC recovered US$6.4 million. 
Because the patties were negotiating the revenue share percentage, it was unknown how 
much should be remitted to NOCAL. When NOCAL issued a letter dated October 3, 2008 
agreeing to 60%> / 40%) revenue split in favour of NOCAL, there was no mention of paying 
interest on the revenue share for NOCAL. TGS-NOPEC did remit NOCAL s share within 45 days 
of receiving the letter approving the 60%>/40%o revenue split in favour of NOCAL. 

131. We disagree with this finding and any, suggesting that TGS-NOPEC has "erased or tainted" 
invoices and documents with the intention of deceit or to defraud NOCAL of its appropriate 
revenue share. The 2004 MOU state "NOCAL shall have the right to audit the financial 
statements of TGS-NOPEC with regard to revenues from licenses of Liberia's seismic data. " The 
term "with regard to" is defined in dictionary to mean "referring to" or "concerning." TGS- 
NOPEC has fully complied with this audit provision and has made available all documents 
"referring to" or concerning" Liberia seismic data including contacts, invoices, wire transfer and 

27 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

confidential. TGS-NOPEC will not provide a gross revenue general ledger report as this will 
contain confirmation information that doesn't refer to or isn't concerning Liberia seismic data. 

132. With regard to the suggestion that TGS-NOPEC has "erased or tainted" invoices and 
documents, we are within our rights to not share information pertaining to other data sales. In 
some instances, client made multiple purchases that were contracted for, under one 
agreement. TGS-NOPEC has redacted those portions of the contracts and invoices that don't 
refer to or aren't concerning Liberia seismic data. 

133. We agree that neither NOCAL nor TGS-NOPEC established an Escrow Account in the form of a 
separate bank account. However, TGS-NOPEC did keep a detailed accounting of all Liberia 
seismic data sales, the revenue share amounts earned by NOCAL and the amount of funds that 
were advanced to NOCAL. Based on this detailed accounting, NOCAL has been paid 100% of 
the revenue share that it is entitled to by the 2004 MOU and the October 3, 2008 letter. 

134. Under the heading labelled "Risk": the statement is made "The failure to provide the general 
ledger and other financial records impacted our work to determine the actual revenue 
generated from sales of Liberia seismic data. "Other than the general ledger, TGS-NOPEC is not 
aware of any "other financial records" that have not been made available. We request that you 
provide a detailed list of those "other financial records" that are to determine actual revenue 
generated from sales of Liberia seismic. 

135. With regards to the recommendations, TGS-NOPEC responds as follows: 

• We disagree with the conclusion that a balance is due NOCAL for reasons discuss 
above and we disagree with the concept of interest being owed to either party as the 
2004 MOU makes no provision for interest. 

• We have fully complied with the audit provision to provide financial records that are 
referring to or are concerning Liberia seismic data sales. Please provide a list of 
"other financial records" that are not been made available and Ed Neese Vice 
President, Finance will be responsible for determining if any of other financial reports 
or documents can be provided. 

• We agree and have done so when requested by NOCAL. David Hicks, Vice President 
of AMEAP and Ed Neese Vice President, Finance will be responsible for promptly 
remitting NOCAL's revenue share on any future collected revenue for Liberia seismic 
data sales. 

• For 2D seismic data sales, the 2004 MOU is no longer the governing document. TGS- 
NOPEC will comply with the 60%/40% revenue split per the NOCAL letter dated 
October 3, 2008. David Hicks, Vice President of AMEAP and Ed Neese Vice President, 
Finance will be responsible for promptly remitting NOCAL 's 60% revenue share per 
this letter. 



28 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

Auditor General's Position 

136. In my opinion, the clarification provided by TGS-NOPEC Management on the provision of the 
financial records regarding the sales of Liberia's seismic data, that it has fully complied with the 
audit request to provide financial records concerning Liberia seismic data, was not made 
available to the audit team. The underlying records required for the evaluation of the integrity 
of the financial statements regarding the shared revenue with NOCAL Financial records referred 
to by TGS-NOPEC, which was provided to the audit team after a protracted delay, was a mere 
summary of yearly revenue amounts. The summarized amounts were not detailed and 
complete to be relied on to provide the necessary assurances that the reported figures 
presented a true and fair view of the sales of Liberia's Seismic Data. 

137. The operating agreement used in determining the appropriate revenue share for Liberia is the 
MOU dated 27 January 2004 ("2004 MOU") which replaced the MOU dated 30 November 2002. 
The 2004 MOU, states "NOCAL and TGS-NOPEC agreed that if TGS-NOPEC was not paid the 
full sum of US$6.4 million through its 50% share of all SALES by 30 November 2004, then the 
balance in the Escrow Account shall be paid to TGS-NOPEC and all SALES shall be split 
90%/10% in favour of TGS-NOPEC until TGS-NOPEC's full US$6.4 million is recouped." The 
non-establishment of the escrow account and provision of the requested underlying ledgers 
and records made it impracticable to adequately verify revenue that was declared by TGS for 
the period under review. 

138. The definition of SALES for purposes of revenue sharing is defined in the 2004 MOU. The MOU 
did not exempt revenues from Tape Copy, Product Charges, and Report and Wells Log, as 
TGS-NOPEC would want me to accept. 

139. Regarding the 60%/40% split of the revenue sharing, payments representing 40% share were 
made to TGS-NOPEC without a formal agreement. My recommendations are based on the 
identified irregularities that were not in accordance with the MOU and the Act creating NOCAL. 

140. I agree with TGS-NOPEC's assertion that though the concept of interest on amount being owed 
to NOCAL was not provided for in the MOU, the MOU does not give TGS the right to withhold 
NOCAL share of revenue unnecessarily, thus denying the Government of Liberia needed 
revenue. There is a cost associated with holding NOCAL's funds, which is the interest rate 
indicated by the prevailing market rate at the time of determination of the amounts to be paid. 
As a result, I maintain my recommendation that TGS should pay the accumulated interest for 
unilaterally withholding NOCAL share of revenue. 

141. TGS-NOPEC provided explanation to justify its collection of 90% share from the sale of Liberia's 
Seismic Data instead of 50% share. However, the justification given is not valid. The MOU of 
2004 explicitly provides for TGS-NOPEC to receive a 90%/10% split in its favour after 30 
November 2004, provided TGS-NOPEC is not paid the full sum of US$6.4 million through its 
50% share of all SALES by 30 November 2004. TGS-NOPEC violated this provision of the MOU 
when it started receiving 90% of the revenue instead of 50% as of 27 January 2004 - i.e. 10 
months prior to 30 November 2004. 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



142. It was however important to note that TGS-NOPEC had, on account of the audit, remitted 
US$1,266,102.59 of NOCAL share of revenue generated from the sales of 2D Seismic Data 
which has been outstanding from 2004, into NOCAL's account and since then, it has made 
prompt remittances of NOCAL's share of the revenue generated as exhibited in the bank 
transfer slip of the payment from TGS-NOPEC to NOCAL. See Exhibit 1 

Payment of "lobbying fees" to National Legislature: US$118,400.00 

Observation 

143. On the basis of the approval from the Board Chairman, Clemenceau Urey, a total amount of 
US$118,400.00 was paid out of the account of NOCAL for what management termed "Lobbying 
fees" to some members of the National Legislature for the purpose of ratifying petroleum 
contracts that were pending at the National Legislature. 

144. A review of DVs in conjunction with Board minutes disclosed the following irregular payments: 

• Review of Board minutes indicated that on 15 May 2007, US$32,000.00 was paid out 
of the Company's account to some members of the Legislature as first and second 
payment of lobbying fees for the ratification of Broadway PLC and Oranto Petroleum 
contracts; it was not paid to the National Legislature as an institution. The minutes 
also indicated that US$50,000.00 was borrowed as a loan from LPRC and purportedly 
used for the same lobbying purpose. An advance payment of US$26,000.00 by 
Oranto Petroleum was also used to pay as purported lobbying fees. The Board 
minutes did not indicate the source of the remaining US$10,000.00 that was 
allegedly paid to some Legislators. 

• NOCAL Management over-spent its approved budgetary allocation for expenditure by 
US$32,400.00. It is apparent from my findings that the irregular transactions 
indicated above contributed to the expenditure over-run as observed. The Financial 
Comptroller, Fulton Reeves, also confirmed that the extra-budgetary expenditure 
occurred due to amounts paid that were not budgeted for. 



145. Details of the irregular payments for purported lobbying fees are revealed in table 2 below: 



Table 2 : Irrec 


lular Payments For Purported Lobbying 


1 Fees 


Date 


Name of 
Recipient 


Voucher # 


Check* 


Amount-US$ 


Comment 


Sept. 19, 
2006 


Timothy 
Wiaplah 


0500 


486201 


26,900.00 


Amount was allegedly disbursed 
to the Legislators by NOCAL's 
Chief Accountant. 


Aug. 28 ,2006 


Timothy 
Wiaplah 


0297 


451866 


50,000.00 


The amount was allegedly 
disbursed to the Legislators by 
NOCAL's Chief Accountant 


April 4, 2007 


Alomiza 
Ennos Barr 


0083 


486255 


40,000.00 


The Honourable Member of the 
House of Representatives, 
Alomiza Ennos Barr, received 



30 Promoting Accountability, Transparency, Integrity and Fiscal Probity 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Date 


Name of 
Recipient 


Voucher # 


Check* 


Amount-US$ 


Comment 












US$40,000.00 from NOCAL. 


April 17, 2007 


James Kaba, 
Esq. 


0095 


486256 


1,500.00 


The Chief Clerk of the House of 
Representatives, James Kaba 
received US$1,500.00 from 
NOCAL. 


Total 








118,400.00 





146. Representative Barr acknowledged receiving US$15,000.00 of the US$40,000.00, but she 
signed two separate receipts for US$25,000.00 and US$15,000.00 on the same day. I invited 
Representative Barr, Representative Rufus Neufville and other members of the Committee on 
Investment to my office to inquire about the US$118,400, as Representative Barr had informed 
me that she delivered the funds to the Joint Committee of the House and Senate on 
Investments. At the time the payments were made, Representative Neufville was the Chairman 
of the Committee. During the discussion in my office, Representative Neufville admitted being 
the Chairman of the Committee at the time but he and other members of the Joint Committee 
denied ever receiving any money from NOCAL or Representative Barr. 

147. I was also presented the receipt made by the Chief Clerk for the US$1,500.00 he received from 
the money designated for "lobbying fees." On repeated attempts, Chief Clerk Kaba refused to 
indicate the purpose for which he received the funds. 

148. Though the Board's Chairman intimated that the lawmakers requested for such an amount of 
funds from NOCAL to rapidly facilitate the ratification of contracts before the House, there were 
no documentation to indicate that the funds were requested by the Legislators. Moreover, 
NOCAL's Management did not provide documentary evidence to indicate who received the 
remaining amount of US$76,900.00. The checks were however made in the name of the 
Company's Senior Accountant, Timothy Wiaplah, for disbursement to the intended Legislators. 

149. Furthermore, review of Board minutes and supporting records relating to the payments of 
lobby fees to Legislators revealed that the President of Oranto Petroleum, Prince Arthur Eze 
also authorized the disbursement of additional funds to clerks and secretarial staff of the House 
of Representatives amounting to US$1,500.00 in order to influence the decision of Legislators 
in ratifying the Oranto Petroleum Oil contract that was before the House. Exhibit 2. This 
amount was given to the Chief Clerk and he signed for it, as reflected in the preceding table. 
This also revealed that Oranto Petroleum Oil was aware and actively participated in the scheme 
to influence the passage of its Contract by the Legislators. This act contravenes the law and is 
punishable under sections 12.50 and 12.52 of the Penal Law of Liberia. 

150. The justification given that the US$118,000.00 was intended for Legislators to ratify the 
petroleum contracts was unreasonable and unclear given that the Legislators are public officials 
who are paid for services rendered to the Government. The alleged payment of such funds to 
the Legislators to perform their duties is improper and unjustified. They have pre-existing duty 
to perform as per their job and there was no need to offer them money individually to perform 



31 | Promoting Accountability, Transparency, Integrity and Fiscal Probity 



GAC 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

their statutory obligation. But as indicated, the legislators denied receiving funds from 
Representative Barr and NOCAL. 

151. The members of the Board of NOCAL recognized the irregularity as indicated by its members in 
the Board's minutes of Tuesday, 15 May, 2007. At that meeting, the Board Members 
emphasised that they were not aware of the circumstances for the payment of the lobbying 
fees. Some of the Board members even questioned the legality of such payments to the 
Legislators, as it could be viewed as bribery to influence a passage of Concessions and 
Contracts. This view was further supported by an apology by the Board's Chairman for 
unilaterally authorizing the payment of said fees without the consent of the Board. 

Risk 

152. The payment of lobby fees to members of the Legislature is irregular and is intended to 
influence the Legislature, thus undermining Liberia's democracy. It constitutes bribery and also 
contravenes section 12.50 (1) of the Penal Law of Liberia which states that "a person has 
committed bribery, a second degree felony, if he knowingly offers, gives or agrees to give to 
another or solicit, accepts or agrees to accept from another, a thing of value as consideration 
for : (a) The recipient's official action as a public servant; or (b) The recipient's violation of a 
known duty as a public servant". In particular, the following risks are associated with the 
payment of lobbying fees to the Legislature: 

• Through the act of lobbying, funds could be illegally abused by officials of the 
Company. 

• The payment of lobbying fees to Legislators to pass concessions and contracts could 
also undermine fair competition as only those companies willing to make payments 
to public officials can get their contracts passed into law, thereby denying 
opportunities to well managed and financially capable companies from benefiting 
from concessions and contracts in Liberia. 

• The Legislature might compromise in its deliberation of issues for which it was 
lobbied, thus not taking decisions in the public interest such as making value for 
money decisions especially in the areas of sales of Liberia's natural resources. It is 
evident that there have been sales of concession interests acquired by these firms to 
other international firms, such as the recent sale of Oranto interest to US-based 
Chevron. 

• Lobbying could lead to extra-budgetary spending. 
Recommendation 

153. Representative Alomiza Ennos Barr should be made to restitute US$40,000.00, she received 
from NOCAL and for which others have denied receiving from her. Payment by Representative 
Barr should be receipted with a copy sent to the GAC. 



32 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



154. Chief Clerk Kaba should also be made to restitute the full amount of US$1,500.00 he received 
from NOCAL and for which he has provided no accounting for its usage. Payments by Chief 
Clerk Kaba should be receipted with a copy sent to the GAC. This payment was made to the 
Chief Clerk to assist in the passing into law the petroleum contracts 

155. The Chairman of the Board of Directors, Members of the Board of Directors and the President 
of NOCAL, Dr. Fodee Kromah should be sanctioned for bribery, as it is documented that they 
bribed Chief Clerk Kaba and Representative Barr for the passage into law of petroleum 
contracts. Both Chief Clerk Kaba and Representative Barr acknowledged receipt of said money 
from NOCAL. 



156. On the basis of the explanations provided by Chairman Urey, I have modified my 
recommendation to hold President/CEO, Dr. Fodee Kromah accountable to restitute the 
US$76,900.00 which he authorized to be paid from NOCAL's account without prior Board 
approval and an amount which the Legislators have denied receiving from him. President 
Kromah did not contest that the Chief Accountant did not perform as was directed when checks 
were written in his name for onward encashment and distribution to select members of the 
National Legislature. This was further evidence that the petroleum contracts were ratified by 
the National Legislature. 

157. Management should avoid providing lobby fees to the National Legislature, as such practice 
tends to compromise the independence of the Legislators in making value for money decisions 
on contracts and concessions agreements and more critically, it undermines Liberia's 
democracy. Therefore, the Government of Liberia through the Minister of Justice should 
employ the necessary legal means to remedy the irregular payment of "lobbying fees". 

158. The Broadway and Oranto contracts should be nullified by the National Legislature, due to the 
process being compromised and thereby denying the assurance that the contracts were ratified 
for the benefit of the Liberian people. 

159. The Minister of Finance should regulate inter-governmental borrowing by clearly defining the 
parameters and purposes for which inter-government borrowing can be carried out. NOCAL 
borrowed US$50,000.00 from the Liberian Petroleum and Refinery Company (LPRC) for no 
other purpose but to pay what is referred to as "lobbying fees" to the Legislators to ratify two 
petroleum contracts. LPRC, like NOCAL, is a state-owned enterprise. This regulation will 
prevent the misuse of public funds, as clearly the money borrowed from LPRC was misused. 

Management's Response 

160. Although management recognizes that this is a common practice, however, from henceforth 
we will refrain from so doing. 

Chairman Ureys Response, 31 March 2010 

161. When we took over from the previous leadership of NOCAL in 2006, the Board and 
Management decided to review the contracts which had already been signed with the previous 
management and contractors so as to explore ways in which we could make the contract 

33 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

better for Liberia. We, therefore, prepared and addendum to the existing contracts. This 
addendum contained the following: 

a ) Impro ved exploration and work commitments. 

b) Strengthened the Contractors obligations in respect of the exploration periods 
and environmental management. 

c) Clearly defined the recovery of petroleum cost and production sharing 
schedules. 

d) Contained an obligation on the part of the contractor to pay taxes. 

e) Introduced bonus and hydrocarbon development fund. 

f) Improved investment in human resources development, including an annual 
$75,000 contribution to the University of Liberia for each contract. 

g) Improved the annual social and welfare contribution to the budget. 

162. 7776" contractors did not take kindly to these new introductions to the existing contracts. We 
wrested with them, remained steadfast and were able to get them to accept most of what was 
proposed. We presented to the National Legislative what we believed was the best possible 
deal given the fact that Liberia is considered a frontier territory (no history of oil discovery). 

163. These Contracts were presented to the National Legislature on August 17, 2006. They were not 
retified until April 16, 2007, a period of about eight months. During this period, we continued 
to engage the Legislators and explained to them what benefits the discovery of oil would mean 
for Liberia. They, however, continued to stick to their demands. After consultation 
with the authorities we gave in to their demands, reluctantly. The first amount was 
$ 50,000.00 was approved by the Board. 

164. A scrutiny of the minutes will reveal that we did not have fund at the time; the Board 
authorized management to borrow it from the LPRC A second payment was made to the 
Legislators without the approval of the Board. I was informed by Dr. Kromah, NOCALs 
President that the situation demanded that this amount be paid right away. I do not believe I 
was even in the Country and many Board members were unavailable. 

165. Dr. Kromah explained the situation to me, and I explained it to the Board. The Board was 
concerned that it was not aware of that payment. It was then explained that all subsequent 
payments of such nature would get the Board approval first. It was in that connection that the 
apology was made. The minutes incorrectly reflected that I apologized for authorizing the 
expenditure. I DID NOT apologize for such. An apology was made for not obtaining the 
approval of informing the Board before the second payment was made. 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

166. In public service one's overriding interest should be the national interest, and sometimes a 
public servant does improper things in pursuit of national interest. We were quite aware that 
making payments to the legislators was wrong. These payments were made after much 
discussion, consultations and reflection. We decided to comply with the request because we 
believed that ratification of these contracts could lead the discovery of oil and this could bring 
huge economic and social relief to our people. The amounts were not paid to induce the 
Legislators to ratify faulty contracts. I trust what we have done will be vindicated when oil is 
discovered and the lives of our people are transformed. 

Auditor General's Position 

167. In my view, the issue worth determining in connection with the payment of "lobbying fees" is 
whether it is a 'common practice' as known in Liberia and should take precedence over the 
provisions in the Liberian Constitution and Liberian laws, as insinuated by management in its 
response. I acknowledged management's response that it will refrain from the act of giving 
funds to members of the National Legislature. It is accepted that this practice will stop and at 
the same time, my recommendations will be implemented. 

168. Common practices' of giving funds to some members of the Legislators through the provision 
of public funds to ratify contracts and concessions is not an acceptable practice, as in some 
jurisdiction there is severe penalties including criminal charges for inducing Legislators through 
the giving of funds. The United States Foreign Corrupt Practices Act of 1977 prohibits the 
giving of money to public officials to influence official decisions, such as ratifying concessions 
and contracts. This alleged and un-spoken 'common practice' also contravenes sections 12.51 
and 12.52 of the Penal Law of Liberia which prohibits unlawful rewards and compensation to 
public officials. 

169. Furthermore, 'Common practice' of giving funds to some individual members of the National 
Legislature was also not done in the manner that was transparent and accountable. For 
instance, besides the receipt of the US$40,000.00 from Representative Barr and the 
US$1,500.00 paid to Chief Clerk Kaba, the Management of NOCAL did not provide any evidence 
of how and to whom the balance US$76,900.00 was paid. The refusal to provide the names of 
the members of the National Legislature who received the US$76,900.00 further demonstrates 
the irregular nature of the transaction, such that the process was not transparent and the 
funds have not been accounted for. 

170. The legislators have denied the assertion made by Chairman Urey when he wrote: 

"These Contracts were presented to the National Legislature on August 17, 2006. They 
were not retified until April 16, 2007, a period of about eight months. During this period, 
we continued to engage the Legislators and explained to them what benefits the 
discovery of oil would mean for Liberia. They, however, continued to stick to their 
demands. After consultation with the authorities we gave in to their demands, 
reluctantly. The first amount was $ 50,000.00 was approved by the Board. " 



35 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



In public service one's overriding interest should be the national interest, and sometimes 
a public servant does improper things in pursuit of national interest. We were quite 
aware that making payments to the legislators was wrong. These payments were 
made after much discussion, consultations and reflection. We decided to comply with the 
request because we believed that ratification of these contracts could lead the discovery 
of oil and this could bring huge economic and social relief to our people. " 

171. Chairman Urey has admitted that monies provided the legislators were wrong but then 
contended that it was not intended to influence the passage of the acts. Paradoxically, 
Chairman Urey said that "we give into their demands reluctantly. The first amount was 
$50,000.00 was approved by the Board." This was a loan from LPRC as indicated in the 
detailed of this report. His only justification is that, " We decided to comply with the request 
because we believed that ratification of these contracts could lead the discovery of oil and this 
could bring huge economic and social relief to our people. "This is a glaring contradiction on 
the part of Chairman Urey. The Board and management gave into the demand. The Board and 
Management decided to accept the request for payments to ratify the contracts. But then it 
hard to defend his position that the funds were provided to influence but he acknowledged that 
it was wrong. 

172. Chairman Urey further indicted the Board and Management when he contended, "these 
Contracts were presented to the National Legislature on August 17, 2006. They were not 
retified until April 16, 2007, a period of about eight months. "By his own admission, NOCAL had 
to pay off the Legislators to ensure passage of the contracts, as again, Chairman Urey 
defended that "we gave in to their demands, reluctantly. The first amount was $ 
50,000.00 was approved by the Board. " 

173. It is on the basis of the foregoing that I recommend that the Broadway PLC and Oranto 
Petroleum Contracts should be nullified by the Legislature and that the total amount of 
US$118,400.00 should be refunded to NOCAL's coffers by Representative Alomiza Ennos Barr, 
Member of the House of Representatives, Atty. James Kaba, Chief Clerk, House of 
Representative and CEO/President Fodee Kromah of NOCAL. The Government of Liberia 
through the Minister of Justice should employ the necessary legal means to remedy the 
irregular payment of "lobbying fees". 



Governance Issues 



Re-capitalization of NOCAL and Pursuit of Strategic Goals 

174. Section 6 of the Act creating NOCAL states "The Corporation is authorized to issue a maximum 
of one hundred (100) shares of stock, all of which shall be no par value. All of the Corporation's 
shares shall be owned by the Republic of Liberia. The Corporation shall have an initial capital of 
two hundred and fifty thousand United States Dollars (US$250,000). This amount shall be 
advanced out of monies in the public treasury. The President of Liberia is authorized to 
increase the capital of the Corporation from time to time, as may be deemed necessary. Such 
amounts as actually appropriated shall be paid to the Corporation by the Minister of Finance in 
the manner provided by law. " 

36 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



175. There was no complete documentation on injections towards capital made by the Government 
of Liberia into the Company since its creation in 2000 by an Act of the National Legislature. My 
review of accounting records provided by the current management indicated that so far, 
US$326,604.09 had been injected by the current Government, which exceeded the proposed 
initial capital of US$250,000.00 in the Act by US$76,604.09. However, NOCAL Board's minutes 
of April 2004 indicated that the Government of Liberia through the then Transitional 
Government of Liberia contributed US$150,000. 00,the amount which the current management 
failed to provide the accounting records underlying the mentioned amount in the Board 
Minutes of April 2004 to account for said contribution made by the Transitional Government. 
Management provided schedule reflecting the current Government contributed capital 
amounting to US$154,880.09 and US $171,724.00 in both 2006/2007 and 2007/2008 Fiscal 
Years respectively, as detailed in the below tables: 



Table 3A: Schedule of GOL Capital Injection July 2007 - June 2008 



DATE 


DESCRIPTION 


CHECK # 


AMOUNT US$ 


AMOUNT LD$ 


Total US$ 


oct. 11, 2006 


GOL 


53697 


28,089 






Nov. 17, 2006 


GOL 


72144 


26,438.00 






Dec. 21, 2006 


GOL 


84149 


13,161 






Jan. 12, 2007 


GOL 


87192 


17,118 






Feb. 19, 2007 


GOL 


94175 


10,882 






Mar. 12, 2007 


GOL 


17277 




177,538 




Mar. 12, 2007 


GOL 


17293 




179,471.54 




Mar. 23, 2007 


GOL 


11456 


8,905 






Apr. 4, 2007 


GOL 


17630 




182,506.66 




Apr. 20„ 2007 


GOL 


20660 




179,838.26 




May. 1, 2007 


GOL 


124454 


9,080 






May. 1, 2007 


GOL 


132022 


16,644.32 






Jun. 1, 2007 


GOL 


140771 


9,100 






Jun. 18, 2007 


GOL 


20404 




177,505 




TOTAL 






139,417 


896,859.46 




Exchange rate 








58/1 




Grand Total 






139,417 


15,463.09 


154,880.09 



Table 3B: SCHEDULE OF GOL CAPITAL INJECTION JULY 2007 - JUNE 2008 



DATE 


DESCRIPTION 


CHECK # 


AMOUNT US$ 


AMOUNT LD$ 


Total US$ 


Jul. 6, 2007 


GOL 


154893 


10,474 






Jul. 6, 2007 


GOL 


20414 




179,839 




Aug. 30, 2007 


GOL 


180164 


22,743 






Sept. 11, 2007 


GOL 


20965 




78,465.48 




Sept. 28, 2007 


GOL 


22231 




178,798 




Oct. 12, 2007 


GOL 


155221 


13,171 






Dec. 28, 2007 


GOL 


23569 




190,798 




Jan. 17, 2008 


GOL 


271880 


11,751 






Jan. 17, 2008 


GOL 


23579 




188,949 





37 | Promoting Accountability, Transparency, Integrity and Fiscal Probity OftC"* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



DATE 


DESCRIPTION 


CHECK # 


AMOUNT US$ 


AMOUNT LD$ 


Total US$ 


Jan. 23, 2008 


GOL 


271850 


11,751 






Feb. 4, 2008 


GOL 


44322 




182,414 




Feb. 6, 2008 


GOL 


44326 




188,949 




Feb. 9, 2008 


GOL 


261656 


14,926 






Feb. 29, 2008 


GOL 


44405 




188,949 






GOL 


298827 


16,989.01 








GOL 


339466 


38,485.51 






Jun. 24, 2008 


GOL 


DEPOSIT-CBL 




508,847 




Total 






140,291 


1,886,008 




Exchange rate 








60/1 




Grand Total 






140,291 


31433.467 


US$ 171,724 



176. For all of the injections made by the Government into NOCAL, the Company had not issued 
Stock Certificate as proof of Government Investment in the Company. It was however unclear 
how much Capital the current and past Governments had provided to the Company, as there 
was no documentary evidence presented to me by management of the Company to accurately 
account for all Government contributions towards capital of the Company. 

Illegal Constitution of NOCAL Board of Directors 

177. Section 7 of the Act states " The management of the Corporation shall be vested in and 
exercised by the Board of Directors consisting of not less than three (3) or more than seven (7) 
members, all of whom shall be appointed by the President of Liberia. The President of Liberia 
shall appoint the Chairman of the Board of Directors and the President and Chief Executive 
Officer of the Corporation. Members of the Board shall serve at the pleasure of the President of 
Liberia. Directors to be appointed shall include persons knowledgeable in the fields of 
hydrocarbons, finance, economics and management." 

178. Contrary to these provisions in the Act, my review of the appointment letters relating to Board 
Member revealed that only the Board Chairman appointment's letter was signed by the 
President of Liberia and the rest of the purported appointment letters of the other Board 
Members were signed by Morris G. Saytumah, Minister of State for Finance and Legal Affairs. 
Further examination of the appointment letters also revealed that only the letter appointing the 
Chairman was on the official letter head of the president; the rest were without letterheads. 

179. I requested for the Curriculum Vitae of the Board members to establish whether the Board 
collectively possessed the required knowledge in Finance, Economy, and Management, etc. as 
provided for under the NOCAL Act. The Management of the Company or the Ministry of State 
for Presidential Affairs could not provide supporting documents on the profile of the Board 
members as stated in the Board Members' Curriculum Vitae for me to confirm their 
competence. 

180. The President mandated the Board Chairman to put in place a Search Committee to select and 
appoint the Chief Executive Officer, one or more Vice Presidents and other executive officers. 
In the appointment letter of the Board's Chairman, the President also mandated the Chairman 

38 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



to also prepare full briefing on the operation of the Corporation for the early submission to her 
office. 



181. My requests to both the Management and Minister of State for Presidential Affairs for 
documentation on the Search Committee's deliberations leading to the appointment of the 
Chief Executive Officer, Vice Presidents and other Executive Officers for the purpose of 
ascertaining compliance with the President's directive were not heeded to. I did not sight 
evidence indicating that the Board ever constituted the Search Committee to select the CEO 
and other Senior Officers, Besides, neither the Company nor the Minister of Presidential Affairs 
presented documents to me, upon request, to show that the current Board took stock of the 
Company's performance and set Strategic Goal or Direction as directed in the President's 
appointment letter of the Board's Chairman. 

Risk 

182. Inaccurate knowledge of GOL investment in NOCAL could be detrimental to the Company's 
interest as well as Liberian taxpayers' interest in situation where the GOL decides to pursue 
joint ventures with other partners for the early development and exploitation of Liberia's liquid 
and gaseous hydrocarbon potential, a trend that is prevailing worldwide. In that event, 
NOCAL's worth may be under-valued. 

183. Also the non-composition of NOCAL Board in consonance with the provisions of NOCAL 
enabling enactment as well as the non-selection and appointment of the Company's President, 
Vice President and Executive Officers on the basis of the President's directive, could hamper 
the operations of the Board and Management, and by extension the Company. This is because 
the petroleum industry is highly technical and therefore NOCAL's Board and Management 
should have the requisite knowledge and know-how as necessary for the effective, efficient 
and economic development and exploitation of Liberia's liquid and gaseous hydrocarbon 
resources. 



184. The Board's failure to produce and submit to the President of the Republic of Liberia, a report 
on Strategic Goal or Direction for NOCAL, as indicated in the President's Appointment Letter of 
the Board Chairman, constitutes a significant failure. Such a report is urgently required to 
inform GOL's decision on early development and exploitation of Liberia's liquid and gaseous 
hydrocarbon potential. It is also intended to provide clear direction for NOCAL, as well as 
enable its management to align resources from medium to long term strategic imperatives. 

Recommendation 

185. NOCAL Management should document all GoL investments made in the Company and, where 
appropriate, undertake revaluation of NOCAL's worth, so as to determine GOL worth in it. 

186. On the basis of the above recommendation, GOL interest in NOCAL as expressed in stocks 
should be issued to GOL. 

187. NOCAL Board should compile the strategic goal report requested by the President and through 
that determine how much by way of injection will be required from the GOL or other partners, 

39 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



for the early development and exploitation of Liberia liquid and gaseous hydrocarbon 
resources. 



188. A review of the composition of NOCAL Board should be made by the President, bringing onto 
the Board, Liberians with requisite skills in liquid and gaseous hydrocarbon development and 
exploitation. 

189. The President should retroactively issue appointment letters for the existing Board Members so 
as to regularize their appointments to provide the legal basis for the remuneration and other 
benefits they have thus received from NOCAL, as of date, there is no legal basis for the 
payments they have received from NOCAL. 

190. Similarly, the non-establishment of the Search Committee as directed by the President denied 
assurance that the current Management of NOCAL has the knowledge and know-how for the 
early realization of the benefits of Liberia liquid and gaseous hydrocarbon potential. The 
President is thus advised to do a search of Liberia citizens with the requisite background to 
encumber NOCAL's top Management positions to make possible the realization of this object. 

Management's Response 

191. Paragraph # 163-165: We are not very clear on what the GAC is indicating here. NOCAL's 
enabling enactment clearly indicates that the minimal initial capital injection by the Government 
of Liberia should be two hundred and fifty thousand United States dollars (US$ 250,000.00). 
The President of Liberia has the power to increase this capital injection from time to time. 
Therefore, an analytical process showing variances and emphasizing excess is unclear. 
Because, it is the Government discretion that the capital injection changes from time to time 
depending on the prevailing situation. 

192. Moreover, the assertion by the Audit Team that there was no complete documentation on 
subsidies received from Government is unfair. The tables presented in this section were a 
result of information provided by Management with respect to subsidies received from 
Government. Hence, we disagree with the findings that there was no complete documentation 
relative to government capital injection. 

193. Paragraph #166-170: We like to clarify here that it is the prerogative of the President of Liberia 
to decide who responsibility of that office should be delegated to. Similarly, letter from the 
President of Liberia not on official Ministry of State Letter head does not fall within NOCAL's 
purview. Therefore, the Ministry of State should be contacted to provide explanation on why 
letter written to Board members were not on official letter head. 



194. We acknowledge this finding on the lack of curriculum vitae for Members of NOCAL's Board. 
But it is consenting to note that we are not the appointing authority, therefore the submission 
of curriculum vitae is not a prerequisite to be accepted as a Board member. 

195. However, as instructed by the President of Liberia, a Search Committee was organized and the 
recruitment process was competitive. Reference Annexure "A" for evidence of the recruitment 
process conducted by the Search Committee. 

40 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

Auditor General's Position 

196. For all of the injections made by the Government into NOCAL, the Company had not issued 
Stock Certificate as a proof of Government's Investment in the Company. It was however 
unclear how much Capital the current and past Governments had provided to the Company, as 
there was no documentary evidence presented to me by management to accurately account 
for all Government's contributions towards capital for the Company. Mere table and statement 
cannot acquit those control issues highlighted in the report. Management should provide Bank 
Statements and a Stock Certificate to support the figures cited by Management in the Table. 

197. Management attempted to provide justification on the excess payment on the basis that the 
President has the prerogative to increase the Government of Liberia's capitalization. 
Management contended: 

"The President of Liberia has the power to increase this capital injection from time to 
time. Therefore, an analytical process showing variances and emphasizing excess is 
unclear. Because, it is the Government discretion that the capital injection changes 
from time to time depending on the prevailing situation. " 

198. Neither the Government of Liberia nor the NOCAL Management provided the substantive basis 
for the excess payment, such as what material justification informed the decision for the excess 
payment. For instance, management did not provide me a report indicating a request from 
NOCAL management that it needed additional capitalization. There was also no document 
provided to indicate the analysis that was done by the Office of the President or the Minister of 
Finance to convince me that the payment was necessary and required to keep NOCAL afloat. 

199. Management also did not provide evidence that it submitted a capitalization schedule to the 
President, disclosing to the President that US$150,000.00 that is acknowledged to have been 
paid by the National Transitional Government of Liberia. Hence, although management has 
contended that the Government of Liberia through the President has the discretion to increase 
its capitalization of NOCAL, it is reasonably expected that such discretion is based on sound 
analysis and adequate documentation. Management's contention that the only material 
justification that it can provide for the excess capitalization is the discretionary powers of the 
President cannot be sustained on the merits, as transactions in Government are governed by 
law and sufficient appropriate documentation. 

200. On the issue of Board appointment, Management provided the following excuse and blamed 
the entire irregularity on the Ministry of State: 

"We like to clarify here that it is the prerogative of the President of Liberia to decide 
who responsibility of that office should be delegated to. Similarly, letter from the 
President of Liberia not on official Ministry of State Letter head does not fall within 
NOCAL s purview. Therefore, the Ministry of State should be contacted to provide 
explanation on why letter written to Board members were not on official letter head. " 

"We acknowledge this finding on the lack of curriculum vitae for Members of 
NOCAL s Board. But it is consenting to note that we are not the appointing authority, 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

therefore the submission of curriculum vitae is not a prerequisite to be accepted as a 
Board member. " 

201. The Ministry of State was contacted. The irregularity was noted and accepted. But 
management's contention is also a flaw. For instance, good corporate governance would 
indicate that before management makes a payment such as board fees to Board members, 
management would have exercised the maximum level of due care to ensure that all board 
members that were paid were duly appointed by the President of Liberia. Management is 
expected to know the legal instrument creating NOCAL. Management is also expected to know 
that it is not a normal practice for appointment letters to be written on a "flying sheet" without 
a letterhead from the Office of the President or the Ministry of State, assuming such 
appointments were on the basis of a directive from the President. 

202. It is clearly stipulated that the President must appoint all Board members of NOCAL. By 
management's contention, it is indicating that Management ignored this provision of the law 
and paid out funds to board members that were not duly appointed by the President of the 
Republic of Liberia. Management has yet to provide me with the basis of payments of board 
fees etc, although it has acknowledged that it did not even have on its file curriculum vitae of 
each Board member. This was a complete negligence on the part of management, which 
cannot be explained away by blaming the Ministry of State. 

203. Management provided false and misleading information as an attempt to justify a noted 
deficiency in the lack of implementation of Presidential directive. Management contended: 

"However, as instructed by the President of Liberia, a Search Committee was 
organized and the recruitment process was competitive. Reference Annexure "A" for 
evidence of the recruitment process conducted by the Search Committee. 

204. Management did not present evidence that the proposed search committee was constituted by 
the Board. Besides, Management did not attach the referenced Annexure "A" as cited by 
management in its response. A Board minute constituting the Search Committee was also not 
provided by management. The names of the members of the Search Committee were not 
provided by management. A report from the purported Search Committee was also not 
provided by management. I also was not provided with any evidence of expenditure made by 
the purported Search Committee, or any per diem or other remuneration paid to any member 
of the purported Search Committee. 

205. I have duly evaluated the explanations provided by management. I have noted that 
management explanations were not substantially supported by documentation or material 
justification to acquit the deficiencies. I have therefore maintained all my recommendations, 
with a modification that the CEO is sanctioned for negligence when he paid remuneration to 
board members without a duly signed appointment letter from the President, which is a 
contravention of the Act creating NOCAL. I have also recommended on the basis of 
management's response that the CEO is further sanctioned for providing materially false and 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



misleading information about the purported Search Committee. Knowingly providing false and 
misleading information is a contravention of Section 12.31 of the Penal Code of Liberia. 

Irregularities noted with Board activities 

Observation 

206. I reviewed NOCAL Board minutes, DVs relating to the payment of Board fees and the Act 
creating the Company, with a view to assessing its activities and validating payments of board 
remuneration for the periods under review. The outcomes of my review are stated below. 

Payment made in Excess of Allotted Amount for Purchase of Motor Vehicles 

207. In NOCAL's approved annual budget for 2007/08 fiscal year, US$60,000.00 was provided for 
the purchase of two (2) twin cabin-pick-ups. A review of payment vouchers and fixed assets 
records indicated that the two pick-ups were procured at a total cost of US$70,583.29, which 
over-ran the budgetary allocation by US$10,583.29. This, in my view, connoted expenditure 
incurred outside the NOCAL's approved Budget; in other words, this was extra-budgetary 
spending. 

Unauthorised Purchase of Vehicle for Board Chairman: US$ 34,500.00 

208. Further review of disbursement records revealed that though NOCAL does not have any 
approved policies to back the procurement of vehicle for its Board Chairman, Management 
procured a twin cabin-pick-up valued at US$34,500.00 for Chairman Clemenceau B. Urey. This, 
in my view, is an abuse of the Company's resources. 

209. Though management provided basis for the procurement of the vehicle for its Board Chairman, 
nevertheless, in my view, the basis provided did not remedy the irregularity, in the sense that 
the provision of vehicle for the Board's Chair is not authorized by NOCAL's Act or any policy of 
the Company. 

210. It is also worth noting that the position of the Board's Chair is part-time and Board Members 
are paid as part time service providers and, for contractual services rendered to the Company. 
Therefore, the use of the Company's resources to purchase a vehicle for a part-time service 
provider, provision of fuel/gasoline and payment of service fees for the vehicle maintenance 
could affect the Company's limited resources. It was also noted that Chairman Urey was 
affected by the pronouncement of President's Sirleaf in January 2009 that all non-statutory 
members be removed from the Board of all Public Corporations and the former Chairman took 
away and possessed the Company's vehicle. 

211. Though I did not observe any document from management permitting the former Board 
Chairman to take possession of the assigned vehicle, the manner in which the vehicle was 
possessed by Chairman Urey when he was relieved of his post suggested that Urey took 
ownership of the Company's property. My auditors travelled to Chairman Urey's residence on 
the AB Tolbert Road in Paynesville to verify the existence of the twin-cabin pick-up, in his 
possession. My auditors' verification revealed that Chairman Urey had the Company's vehicle 
parked at his residence when in fact he was no longer serving as Board Chairman. 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Variation in Board's Remuneration 

212. Section 8(e) of NOCAL Act gives its Board authority to set its own remuneration. However I 
noted that over the period July 2006 to 2008, there were yearly changes in Board fees payable, 
ranging from US$1,000.00 per quarter in 2006 to US$ 2,000.00 in 2007 and US$3,000.00 in 
2008. It was unclear what considerations had prompted the changes in the remuneration 
observed. 

Payment of advances to Board Member: US$2,050.00 

213. I also observed that Board Member, Peter B. Jallah Jr., former Minister of National Security, 
collected from the Company, a quarterly allowance of US$ 2,050.00 in advance, contrary to the 
Act creating NOCAL. The advance paid was also wrongly charged to the Company's Board 
expense account instead of a receivable account, to indicate that the Board Member owed the 
Company because he has been paid for services not yet provided. 

214. Advance payment of an allowance may not be refunded as there is the possibility that a Board 
member may be transferred, dismissed, deceased, or might not have attended Board meetings. 
Therefore, in my view, the advances paid to Board Member, Jallah was irregular. 

Board fees unaccounted for: US$400.00 

215. Board fees paid to Board members from 1 July 2006 to 30 June 2008 amounted to 
US$95,400.00 as was reported in NOCAL's Financial Statements for the two periods under 
review. However, my analysis of the Board fees paid to members for the same period indicated 
that actual Board fees paid amounted to US$ 95,000.00, thus leaving an unexplained 
difference of US$400.00. Annexure 12 

Irregular payment to Non-Board Members: US$ 15,300.00 

216. The composition of the Board of Directors of NOCAL required a maximum of seven (7) 
members as provided for under NOCAL's Act. I noted however that there were more than 
seven Board members, including the President/CEO, who received Board fees. Dr. Fodee 
Kromah, President/CEO of NOCAL, thus received a total of US$12,500.00 as indicated in 
Annexure 11 as Board fees. However, Section 8(g) of NOCAL Act stipulates that the 
President/Chief Executive Officer of the Company "shall not be a member of the Board". This 
by implication means that the Board's remuneration paid to the President/Chief Executive 
Officer is irregular and cannot stand as a charge to NOCAL's account. 

217. I further noted from review of the Company's records, including the minutes of the Board 
meetings that the decision to pay the President/CEO Board fees was taken on Tuesday, 15 May 
2007 at a meeting of the Board of Directors (page 4, paragraph 4 of minutes). Nevertheless, in 
my view, the Board's approval provided did not cure the irregularity, in the sense that 
allowance/fees payment to the President/CEO is not approved by NOCAL's Act. It is instructive 
to note that the appointing authority for NOCAL's President/CEO cannot even approve of the 
Board's allowance payment to the President/CEO of the Company. Though Management may 
tend to depend on an amendment by the Legislature for the payment of Board allowance to 
the President, but will need a referendum, as Article 90 (b) of the Constitution of Liberia 
prohibits such payment to the President/CEO. 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



218. My review also revealed that Management made payment of Board fees to four management 
staff, namely Vice Presidents for Finance and Technical, Marie Leigh-Parker and Jacob S. 
Sandike, Comptroller and HR Manager, Fulton Reeves and Christina Harmon of NOCAL. The 
total amount paid to them was US$2,800.00. The four recipients of these payments as 
indicated in Annexure 11 were observers at Board meetings. I also noted a payment from 
board fees in the tune of US$300.00 made to Accountant Timothy Wiaplah 

219. The NOCAL Enabling Enactment explicitly states that the NOCAL Board appointed by the 
President, which comprised of seven (7) members, shall be paid fees. This implied that only 
those appointed by the President shall be entitled to Board fees. The lapses noted above 
appeared to have been recognized by Director Peter B. Jallah, Jr. in its Board meeting held on 
Thursday, 6 December 2007, where he questioned the attendance of non-board members to 
Board meeting. Though the President, Dr. Kromah, asserted that he has the right to invite any 
staff or member of management to a Board meeting, in my view, to pay non-board members 
because they were invited to a Board meeting is irregular because only duly appointed Board 
members should be paid Board fees for attending Board meetings and staff can be called upon 
by the board to provide clarification on matter required by the Board as part of their regular 
functions. 



Unsupported Board Expenditure 

220. NOCAL's Income Statement for 2006/2007 reported US$ 35,000.00 as Board fees incurred for 
the period. The management failed to present evidence underlining payment totalling 
US$21,300.00 to the Board. Management presented payment vouchers supporting only 
US$13,700.00 out of the total expenditure of US$ 35,000. Ref. Annexure 13A. Similarly, the 
Income Statement for 2007/2008 also revealed that US$60,400.00 was expended as Board 
Fees for the period. Management could not provide evidence to support US$53,500.00 
reported expenditure on Board fees. Payment Vouchers presented by Management could only 
account for US$ 6,900.00.Ref. Annexure 13B. 

221. I also noted that Board Members received Bonuses (Performance Incentives) amounting in 
total to US$14,500.00 as evidenced by a signing sheet showing signatures of Board members 
as of 6 December 2007. Exhibit 4. However, Section 8(e) of NOCAL Act stipulates that 
members of the Board of Directors shall receive stipend. Ordinarily, stipend would exclude 
bonus payment and therefore I consider the bonus payment to the Board members irregular. 

Non-Deduction of tax from Board fees 

222. Section 905 (a) of the Revenue Code of Liberia Act of 2000 states that resident persons who 
make payments to resident natural persons pursuant to a contract of employment are required 
to withhold income tax on payments to employees and individuals according to the schedule 
established in section 200 of the Revenue Code. Section 201 of the Revenue Code further 
describes income that is taxable as aggregate of economic benefits of whatever kind that the 
taxpayer derives during the year. The amounts are to be deducted from every payment to 
employees/individuals and to be paid over to Government on a monthly basis, with payments 
due within 10 days of the last day of each month. 

45 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

223. Furthermore, my review sought assurance that statutory deductions were made from Board 
fees. However, contrary to the provisions of the Revenue Code, I observed that Management 
did not deduct taxes from fees paid to Board members. A review of 84 transactions/payment 
vouchers worth US$ 95,000.00 indicated that management did not pay the total sum of 
US$10,025.54 due from board fees to the GOL. Similarly, taxes were also not deducted from 
some senior management staff of the Company. I have dealt with Board fees received by 
President Fodee Kromah, Vice President for Finance, Marie Leigh Parker, HR Manager, Christina 
Harmon, Vice President for Technical Services, Jacob Sandike, Comptroller, Fulton Reeves and 
Accountant Timothy G. Wiaplah. I also noted payments indicated in the names of former 
Finance Minister, Antoinette Sayeh and former Lands and Mines Minister, Eugene Shannon in 
the tune of US$13,500.00. Former Minister Sayeh is indicated to have received US$1,000.00, 
while former Minister Shannon is also indicated to have received US$12,500.00. I therefore 
endeavour to conduct a forensic investigation into the US$13,500.00, as it is a violation of 
Article 90 (b) of the Constitution of Liberia. 

224. I thus enquired from Management on the matter and accordingly, the Senior Accountant, 
Timothy Wiaplah, explained that payments made to Board members were done without the 
necessary tax deduction because he had not been instructed by management to do so. The 
Company's conduct constituted a contravention of the Revenue Code of Liberia 2000, which 
resulted in loss of revenue to Government. Details of the unpaid taxes due from Board 
members and senior management staff are provided in Annexure 12. 

Risk 

225. The failure on the part of Management and Board to adhere to control procedures and 
provisions contained in the Act establishing NOCAL could undermine the efficient management 
of finances of the Company and impact the effective implementation of budgeted activities. 
Additionally, the occurrence of the events listed below is an indication that management of the 
Company was not on sound footing and this could adversely affect the discharge of the 
Company's objectives: 

• The unauthorized purchase of vehicle for the Board Chair and his retention of said 
vehicle, when even out of office. 

• The Board's award of substantial increase in its stipend annually without justification. 

• The payment of advances to Board member and Board remuneration payment to 
non-Board members, resulting to the loss of revenue to the Company. 

• The non-deduction of income tax from remuneration paid to Board Members and 
non-Board members, resulting to a loss of tax revenue to Government. 

Recommendation 

226. The Chairman of the Board should ensure that management operates within the existing legal 
framework as far as the payment of Board remuneration is concerned. 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



227. NOCAL Board should refrain from allotting money in the budget of the Company for unjustified 
expenditure, including purchasing vehicle for use by a non-employee of the Company (i.e. a 
Board Chairman). 

228. Chairman Clemenceau B. Urey should be made to turn over the Company's vehicle, because he 
is a part-time service provider and there is no provision within the NOCAL's Act or any policy of 
the Company for that matter, granting him such entitlement. 

229. The US$10,025.54 which represents income taxes that the Company defaulted in paying, 
should be paid to the Ministry of Finance by the Management, as required by the Revenue 
Code of Liberia 2000. A copy of the flag receipt should be sent to the GAC by NOCAL. I did not 
consider the total default in the tune of US$14,809.14 as I have instructed a forensic 
investigation into Board fees received by two former ministers and I have also recommended 
that the CEO and others be made to restitute payments made in the name of the Board. 

230. Non-Board Members, Vice Presidents for Finance and Technical, Marie Leigh-Parker, Jacob S. 
Sandike, Comptroller, Fulton Reeves and HR Manager, Christina Harmon and Accountant, 
Timothy G. Wiaplah of the NOCAL, should be made to refund the US$3,100.00 into Company's 
account. 



231. The Board of Directors should be restructured to seven (7) members, to reflect the statutory 
provision on the number of members the Board is required to have, meaning the current and 
all subsequent President/CEO of the company should not be a Board member to receive board 
fees, but rather they should be amendable to the Board. In the same vein, Dr. Kromah, the 
former President/CEO should be made to refund the US$12,500.00 he received from the 
Company's account as Board fees. 

232. Members of the Board who received bonuses (Performance Incentive) amounting to US$ 
14,500.00 (Ref. Exhibit 4) should be made to refund the amount to the Company's coffers as 
such payment is irregular. 

233. The President/CEO should be made to provide supporting documentation for all Board's 
remunerations paid for, which were unsupported. 

Management's Response 

234. When budgets are prepared, prices are inserted based on the current situation. By the time the 
vehicles were purchased, the prices had escalated. Management used its best judgment to 
purchase the two (2) twin cabin pick-ups taking into consideration the contingency component 
of NOCAL Budget. 



235. The corporate By-laws of NOCAL grants the Board of Directors the power to (i) formulate 
policies and direction of management of the corporate article 2 a (i). As such, the annual 
Budget passed by the NOCAL Board is a policy document of the company and is within the 
purview of the Board to devise. Therefore, the observations noted above cannot be viewed as 



47 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



unwarranted and unjustified as it was the Board directives that management purchased a new 
vehicle for the Board chairman. 



236. The Board Chair is of the view that the value of the leadership he had provided the corporation 
in term of the accomplishment it has made (taking it from an illiquid corporation to one that 
can now contribute to the national budget), along with the opportunity cost spent working for 
NOCAL, far exceeded that of the $34,500.00 pick-up and board fees. It is rather unfortunate 
that you would characterize my relationship with NOCAL as that of a part-time service provider, 
who is PAID for service rendered. If the position of Government is that I should return the 
vehicle, you should have it. 

237. 7776 1 vehicle which was parked in my yard was only for safekeeping after the dissolution of the 
Board. You met the car parked in my yard along with other vehicles. The vehicle would have 
been returned to NOCAL had I not been reappointed as Board Chairman. 

238. Furthermore, the advances paid to Board member was an oversight and would be avoided in 
the future. Similarly, the charging of the advance to expense instead of a receivable was an 
over sight and has since been rectified. 

239. Reconciliation is being conducted. When it is concluded, this apparent error will be corrected. 

240. This was a misinterpretation by us. I will refrain from doing so in the future. 

241. The clauses in the Revenue Code 2000, apparently, are unclear to us. When the Ministry of 
Finance clarified the clauses to us, I then commenced to deduct government taxes under 
advice to the NOCAL Board. The Ministry of Finance did not require the payment to be 
retroactive. 



Auditor General's Position 

242. Management has not provided sufficient justification to document why the President/CEO and 
non-board members (i.e. NOCAL's employees) were paid both salary and Board fees. This is 
contrary to NOCAL's Act which states "The President and Chief Executive Officer of the 
Corporation shall not be a member of the Board, but shall nevertheless be amenable to the 
Board and shall be responsible for the day to day operations of the corporation." Moreover, 
NOCAL Board consists of a maximum of seven (7) members appointed by the President of 
Liberia. 



243. I further emphasised that vehicles assigned to staff and board members are the property of the 
entity and must be returned when a staff leaves the entity irrespective of whether his or her 
position is terminated, requested to resign or relieved of his position. The use of private home 
as a storage is an indication that the Company's assets are not adequately managed. The 
President dismissed all non-statutory members of state-owned enterprises. There is no 
indication that the President provided assurances to Chairman Urey that he would eventually 
be re-appointed. But even if Chairman Urey were given assurances, he was still under 

48 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



obligation to leave the vehicle with NOCAL. So his contention that he would have returned the 
car if he was not reappointed is without merits. 

244. Chairman Urey's contention that the car was parked in his yard when the auditors visited also 
provides no assurance that it was not being used by Chairman Urey. 

245. I further maintain my position that the position of Board Chairman is a part-time position. The 
total compensation (remuneration and other benefits) must be approved by the appointing 
power, which is the President of Liberia. The Chairman's contention that the value of leadership 
he has provided and the opportunity cost spent in working for NOCAL far exceeds the 
US$34,500.00 paid for the car and his Board fees is without merit. The Chairman fails to 
measure and quantify the dollar value associated with his alleged leadership and the 
opportunity cost spent on NOCAL's work. 

246. The Board has the prerogative to decide on NOCAL's budget. But the Board also has fiduciary 
responsibility to its appointing power and by extension to the Liberian taxpayers. This is why 
under corporate arrangements; investors like taxpayers can bring derivative lawsuits against 
the Board of Directors when their interest, financial or otherwise, is undermined by Board 
actions. Therefore, the Chairman's contention that the only justification for the purchase of the 
pickup for the Chairman of the Board is because the Board directed management is without 
merit. The Board of Directors cannot direct management to do what is not legal, such as 
purchasing vehicle that was not only budgeted for but which also not consistent with NOCAL's 
enabling Act. I therefore maintain all of my recommendations. 

Administrative Matters 

Irregularities Noted with Procurement of Goods, Services and Works: Non Preparation 
of Procurement Plans 

Observation 

247. Part IV section 40 of the Public Procurement Concession (PPC) Act of 2005 states that all 
Procuring Entities shall undertake procurement planning with a view of achieving maximum 
value for public expenditure by indicating the contract packages, estimated cost, procurement 
method and processing steps and time schedules. Contrary to this provision, the National Oil 
Company of Liberia did not prepare any procurement plans for the period under review. In this 
regard, it was impossible to ascertain whether value for money was achieved. 

No adequate Control over Fuel Coupons 

248. To enhance effective and efficient control over fuel/gas coupons, it is incumbent upon 
management to ensure that stocks of fuel and fuel coupons are managed and regulated 
through the maintenance of stock ledgers and registry. In this regard, fuel coupons procured 
are serially recorded in the stock registry, controlled and managed through the use of 
distribution registers. Where bulk issues are made to a responsible officer for distribution, that 
officer is required to maintain a distribution registry which should be duly signed by recipients 
when allocation of the coupons are made to them. 

49 I Promoting Accountability, Transparency, Integrity and Fiscal Probity i5fl^^ 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



249. However, records made available indicated that NOCAL's Human Resource Manager, Christiana 
N. Harmon, was the one who printed fuel slips/coupon within the Company. It was also 
observed that the printed slips were not serially pre-numbered, thus making it impracticable to 
verify the quantity of coupons purchased and distributed/issued out during the period under 
review. 



250. Moreover, major internal control weaknesses indicated by a lack of effective check and 
balances were noted in the management of fuel supplies for the Company. For instance, the 
Human Resource Manager was responsible for printing of fuel slips, maintaining its custody and 
authorizing its distribution. In other words, the Human Resources Manager was assigned the 
sole responsibility of managing the Company's fuel supplies in respect of ordering, custody, 
handling, and the distribution of the fuel coupons. 

Fuel/Gas procure without following PPC Act 

251. Section 53(a) of the PPC Act states that the request for quotations/shopping method may be 
used for the procurement of goods, works and services, where the procurement is for 
commercially available standard goods, not specially manufactured to the particular 
specifications of the Procuring Entity and the estimated value does not exceed the amount set 
in the schedule on Threshold. Furthermore, Section 54(1,4) of the same Act also states that 
quotations shall be requested for in writing from as many bidders as practicable, but from at 
least three(3) bidders; and a purchase order shall be placed with the bidder that provided the 
lowest-priced quotation, meeting the delivery and other requirements of the Procuring Entity. 

252. Contrary to the above requirements, it was noted from examination of Disbursement Vouchers 
that US$78,524.35 used in the procurement of gas/fuel from July 2006 to June 2008 violated 
the aforementioned sections of the PPC Act 2005. These expenditure were carried out without 
request for quotations, lack of delivery notes, and local purchase order, among others. As a 
result, procurement was carried out without the due process and therefore, there was no 
assurance that value for money was achieved in the supplies obtained. 

253. The situation observed occurred as a result of a lack of internal control and failure on the part 
of officials of NOCAL to ensure that the control procedures provided for under the PPC Act are 
adhered to. 



No Contract Agreement/MOU on the supply of Fuel/Gas 

254. DVs and checks paid to Monrovia Investment Service Station and Ducor Petroleum, Inc for the 
purchase of fuel/gas from July 2006 to December 2007 were not done under contract. The 
absence of a contract with the suppliers denied assurance that funds for the supply of fuel had 
been disbursed to the actual suppliers. The avoidance of a contractual agreement with the 
suppliers is a violation of the PPC Act. 

255. Though, Henry B. Gray, the General Services Manager of NOCAL confirmed that an informal 
agreement was made between NOCAL and the vendors/suppliers regarding the transactions. 
The informal agreements relied on for business activities with the suppliers would lack a legal 
basis in the event of a default by one of the parties. 

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Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Lack of control over Gas/Fuel supply to Utility vehicle 

256. In order to effectively control the running cost of the vehicles, NOCAL is required to maintain a 
vehicle log book that should reveal the location of the vehicles, including authorization of the 
movement, the distance covered, and evidence of monitoring by a supervisor. This practice is 
critical for an effective control over the consumption of fuel. 

257. Management did not maintain vehicle logs to keep track of the movement of its vehicles. I also 
observed that two hundred (200) gallons of gas/fuel was supplied to be used by the Company's 
utility vehicle on a monthly basis. In the absence of the required records on these supplies, I 
could not ascertain whether the gas/fuel issued in favour of the Company's utility vehicles was 
used for the intended purposes. 

Risk 

258. Inadequate segregation of duties as evident with the case of the Human Resource Manager's 
management of fuel supplies could be exploited to the detriment of the Company's resources. 

259. The inability of the officials of the General Services Department of NOCAL to ensure due 
compliance with the PPC Act regarding procurement, may result to the non-selection of the 
lowest responsive evaluated bids, with consequential loss to the Company. 

260. Supply of fuel to the Company without a legally binding contractual agreement could expose 
the Company's resources to risks, and the parties may decline liabilities in the event of a 
default. 



261. Without a standard vehicle log book that is efficiently managed, the Company risks expending 
large sum of funds on the supply and use of fuel as well as maintenance, as a result of 
inappropriate and unauthorized use of the vehicles. 

Recommendation 

262. NOCAL must prepare procurement plans as required by Section 40 of the Public Procurement 
Concession Act (PPC Act) of 2005. 

263. The President and CEO should ensure that Management avoided the internal printing of its 
fuel/gas coupons, but rather procure coupons from reputable vendors while ensuring that the 
coupons are serially pre-numbered on both the stubs and the coupons. 



264. The procurement and distribution of coupons should be segregated. 

265. A registry for fuel coupons should be introduced and properly maintained. 



266. The supply officer should maintain a distribution registry to record all coupons received and 
distributed to staff. 



267. A vehicle log indicating destinations travelled, reasons for travel, mileage covered and 
signatures of drivers should be maintained for all NOCAL's vehicles. Average fuel consumption 

51 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



per kilometre should be computed monthly by the General Service Officer. Any excess 
consumption should be noted and remedial actions instituted. 

268. The President/CEO should ensure that management desist from the procurement of fuel 
without any legal agreement. A legal and binding agreement must be entered into always to 
protect the interest of the Company. 

Management's Response 

269. Management responded to the issues raised as follows: 

• In the Absence of fuel register and fuel ledger, there is a log for the recording of fuel 
and gasoline separately; 

• Coupons printed internally were approved by the voucher. For the purpose of 
reconciliation and distribution, coupons purchased were according to the budget and 
distributed accordingly by the signature of log by the recipients; 

• The vendor, MAU-P Inc., requested that NOCAL print her own coupon and this 
responsibility was delegated to me by Management to print and scrutinize the flow of 
printing coupons assigned to individuals in order to avoid duplication. There was an 
identification mark placed on each coupon to avoid theft. According to the new 
procedure/regulation that has been put into place by NOCAL, MAU-P Inc now prints 
the coupons; 

• The need for quotations was not necessary since the price of gas/ fuel is standardized 
(i.e. the price is the same all over). The other aspects of your observation will be 
implemented; and 

• There is a log for the recording of fuel for the utility vehicle. It is the responsibility of 
the General Services Department to Monitor and keep records of all of NOCALs 
vehicles assigned as well as the utility vehicle. 

Auditor General's Position 

270. Management's contention that the need for quotations was not necessary since the price of 
gas/fuel is standardized is without merit. The intent of the PPC Act, 2005 regarding the 
soliciting of quotation is to procure from vendors with quality services and lowest price. 
Besides, Management failed to provide the referred log book that was used for recording and 
distribution of Fuel/Gasoline to the Company's vehicles, including utility vehicles. Mere 
assertion is not sufficient evidential matter to acquit the noted deficiency. Moreover, there was 
no evidence presented to me by Management to substantiate that Coupons procured by 
Management were in line with the approved Budget of the Company. Management failed to 
substantiate its claims that there were coupons printed internally with special identification 
mark to avoid theft. Management did not provide evidence in the form of coupon stock to 
indicate that there were internal control measures instituted by the management. Moreover, 
management has no basis for the printing of internal coupons (gas/fuel) as it is contrary to 

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Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

standard practices, rather management should have procured coupons from reputable vendors 
indicating pre-numbered on both the stubs and the coupons. Therefore, I maintain that the 
President and CEO should ensure that management desist from the internal printing of its 
fuel/gas coupons, and rather procure coupons from reputable vendors while ensuring that the 
coupons are serially pre-numbered on both the stubs and the coupons. 

Discrepancies in Vendor Confirmation Relating to Transactions with NOCAL 

Observation 

271. During the period under audit (July 2006 - June2008), NOCAL transacted with a total of sixty 
nine (69) businesses for various goods and services. Audit confirmation of transactions 
between these vendors and NOCAL were served. The following issues were observed during 
the analysis of Vendor confirmations and documents obtained from NOCAL (Bank Statements, 
Cash Inflow and Outflow Listing). 

272. My analysis revealed that with the exception of Belleview Airlines and Slok Airline which are no 
longer in operations, four (4) businesses with transactions value at US$12,630.00 could not be 
located nor contacted via mobile phone. Ref. Table 4A. 



Table 4A: Summary of Ghost Vendors (Vendors that were not located) 



NO. 


Name of Vendors 


Amount in USD 


1. 


Comie Consultant 


5,500.00 


2. 


Comprehensive Comp. Consultant 


40.00 


3. 


Ink Publishing-Spirit Magazine 


5,400.00 


4. 


Mwetana Consulting & Tech. Group 


1,690.00 




Total 


12,630.00 



273. Further analysis also revealed that three (3) businesses (Master Key, Gritaco Travel agency and 
Weasua Air Transport) all confirmed that they had no record of business transaction with the 
National Oil Company of Liberia for the periods under review. Information obtained through 
bank statement analysis revealed that NOCAL conducted Business with these entities, totalling 
US$7,553.25. as detailed in Table 4B below: 



Table 4B: Summary of Businesses that confirmed not doing business with NOCAL 



NO. 


Name of Vendors 


Amount in USD 


1. 


GRITACO Travel Agency 


6,653.25 


2. 


WEASUA Air Transport Co. LTd 


880.00 


3. 


Master Key Service 


20.00 




Total 


7,553.25 



274. It was also observed that several check payments in amount totalling US$13,825.39 traced 
from the Cash inflow and Outflow Listing availed for Audit for the periods under review were 
not vouched to the Bank Statements as summarized in Ref Annexure 10A. 



53 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



275. Further analysis on confirmations received from six (6) vendors revealed a number of 
discrepancies (understatements & overstatement) in amounts on Bank Statements and cash 
Inflow and Outflow Listing for the period under review. There was a total under-statement of 
US$2,843.50 and a total over-statement of US$5,662.66 which amounted to a total 
misstatement of US$8,506.16. as summarized in Annexure 10B . 



Risk 

276. There is the possibility that NOCAL could lose funds in dealing with non-existing entities, with 
consequent loss of tax revenue to GOL. 

277. There is also the possibility of material misstatement in NOCAL indebtedness to the suppliers, 
thus impacting the truth and fairness of the financial statements. 

Recommendation 

278. Management should conduct transactions with only registered business entities, as required by 
Section 32 of PPC Act of 2005 and Section 4.2 of the Business Law of Liberia. 



279. Marie E. Leigh-Parker, Vice President for Finance, Fulton M. Reeves , Comptroller and Henry M. 
Gray, General Services Director , should be held accountable and made to jointly and severally 
restitute US$12,630.00, as they did not provide substantive justification on said amount, 
representing transaction cost with businesses that could not be located (Ghost Businesses). 

280. Marie E. Leigh-Parker and Fulton M. Reeves should adjust the accounts of suppliers, which 
indicated that NOCAL's indebtedness to them were understated and overstated by US$2,843.50 
and US$ 5,662.66 respectively. Also, both Marie E. Leigh-Parker and Fulton M. Reeves should 
provide supporting documents to justify US$13,825.39 transactions that was not vouched to 
the Company's Bank Statements. 

281. Marie E. Leigh-Parker and Henry M. Gray should be made to restitute US$7,553.25, as they did 
not provide substantive justification on the dealings with suppliers who confirmed that they had 
no record of business dealings with NOCAL. 

Management's Response 

282. Paragraph #258-289: We disagree with the finding that the mentioned entities are ghost. 
These were all registered businesses operating in Liberia during our time of business with 
them. However, the Audit Teams failure to locate these firms does not indicate that they are 
ghost. We believe this conclusion is without merit. The table below shows full address and 
telephone numbers of these entities: 



Business name 


Address 


Telephone No. 


Amount (US$) 


Comie 
Consultant 


One Ace Place,2 nd floor, Broad Street, 
Monrovia 


06529567/06586557 


5,500.00 


Ink Publishing Spirit 
Magazine 


141-143 Shoreditch High Street, London 
EI6JE 


+44(0)2076138777 


5,400.00 



54 | Promoting Accountability, Transparency, Integrity and Fiscal Probity 



GAC? 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Mwetana Consulting 


Corner of McDonald & Broad Street 


06578456 


1,690.00 


& Tech. Group 









Auditor General's Position 

283. There is no evidence of Business Registration, Tax identification Number (TIN) or Tax 
Clearance to legally prove the existence of the four businesses as required by law. 
Management assertion that " These were all registered businesses operating in Liberia during 
our time of business with them", is without merit as Management failed to provide the relevant 
supporting documents indicating that the four businesses are all registered businesses in 
Liberia. Management also failed to provide evidence of services rendered NOCAL by these 
businesses. The Management indicated in its response that "Spirit Magazine" exist in London, 
but also claimed that it is a registered business in Liberia without proof of business registration 
cannot be sustained administratively and judicially when challenged on the merit. Besides, the 
audit team could not locate these businesses on the referenced addresses quoted on the 
purported invoices they submitted to NOCAL's Management during the period under audit. I 
maintain that these businesses did not exist under the commerce law of the Republic of Liberia 
as legal entities. The Management besides providing a response on the issue of the four 
businesses, a response that was not material to cure the noted deficiency, failed to provide 
responses to other reportable issues as contained in this section of the report. It is instructive 
to note that management did not provide any response on the businesses that confirmed that 
they did not do any transaction with NOCAL in an amount totalling US$7,553.25 as reflected on 
the Bank Statement. This is material, as the confirmations received from these businesses, cast 
serious doubt on the debit notes as contained in the Bank Statement. The Management of 
NOCAL also did not provide any material justification and supporting documentation for the 
underpayment and overpayment in the tune of US$2,843.50 and US$5,662.66 respectively. 
The Management also failed to reveal check payments in amount totalling US$13,825.39 traced 
from the Cash inflow and Outflow List which were not vouched to the Bank Statements. This is 
expenditure outside banking transactions. 



284. The Management action of pushing expenditure on businesses that it did not do business with 
is criminal, and as such needs urgent attention. The Management of NOCAL concealed material 
facts by making withdrawals in the names of businesses that it did not do business with. This 
loss caused, is consequential and should be remedied by the Ministry of Justice. I therefore 
maintain all my recommendations. 



Procurement of Consultancy Services 



Observation 

285. Section 68 (1) of the PPC Act of 2005 states for the purpose of procuring the services of a 
consultant, the procuring entity should prepare a shortlist of three to six consulting firms 
comprising consultants of the same category and similar capacity and business objectives, to 
which it shall provide the request for proposal for services. The shortlist shall be established 
from amongst those who have the capacity to perform the required services as demonstrated 
in their submissions. 



55 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



286. Section 68 (4) of PPC Act also states that the request for proposal shall provide shortlisted 
bidders with the information necessary to enable them participate in the procurement 
proceedings and to submit proposals that are responsive to the needs of the procuring entity. 
Furthermore, Section 52 provides that request for proposal for services is the method to be 
used for the procurement of consultant services, subject only to the exceptions provided in 
sections 70 and 71. Examination of documentation on consultancy services procured by NOCAL 
during the period under review uncovered the following lapses: 



Consultancy Agreement with Mwetana Consulting Technology Group 

287. A consultancy agreement was entered into by the National Oil Company known as the Client 
and Mwetana Consulting Technology Group known as Developer on 2 August 2007. The scope 
of performance of the contract was for the Developer to develop the Website for NOCAL which 
will provide information on the following: 



• The Welcome Page 

• The Company History 

• The President's Page (Links to the Vice President and others) 

• Partners 

• News 

• Corporate/Social Responsibility 

• Projects 

• Photo Gallery 

• Calendar of Events 

• Contact Us 

• Bid Rounds 



288. Unless terminated as provided by the contract, the agreement was to be terminated upon 
completion of the Development Services. The agreement also provided that, the Client may 
terminate the agreement without cause upon thirty days with written notice. In the event of 
termination without cause, client agrees to pay Developer for all Development services 
performed up to the date of termination. Developer was hired on a fixed-price basis to 
perform the services and provide the deliverables described above. 

289. Any material change in the services or deliverables required a written change or designed by 
the parties. Such change may include adjustment to the price or delivery dates. The Fixed price 
for the work was US$1,690.00. It was also agreed that Services will be invoiced according to 
the following payment schedule: 



• On signing of the Contract US$ 900.00 

• Website Delivery US$ 600.00 

• 30 days after Delivery US$ 190.00 



290. No evidence was provided to me during the course of the audit to indicate that the above 
requirements of Contract were adhered to by NOCAL's Management. The Management failed to 
provide minutes of procurement proceedings and proposals from bidders including Mwetana 



56 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Consulting & Technology Group for me to ascertain what procurement method was employed 
and on what basis Mwetana was selected by NOCAL's Management. 

291. Bank Payment voucher 099 dated October 8, 2007 in favour of Mwetana Consulting & 
Technology Group in an amount of US$790.00 for Final settlement for Website Internet page 
was made in contravention of the contractual agreement, which provides for three instalments 
as stated above. Instead of the US$600.00 as second payment for the Website delivery, 
Mwetana received a total payment of US$790.00. 

292. Certificate of completion indicating a successful and satisfactory completion of the consultancy 
terms and conditions of the agreement were not attached to payment voucher as required by 
Rule 24 of the Financial Rule of the Republic of Liberia. 

Consultancy Agreement with Cllr. Stephen Dunbar 

293. During the period under audit, it was observed that NOCAL made several payments to Cllr. 
Stephen B. Dunbar as evident by Bank Payment Vouchers* 0080 dated 13 September 2007, 
Voucher* 0196 dated 28 November 2007 and Voucher* 0491 dated 13 March 2008 in 
amounts totalling US$15,615.00 for Legal Services. However the following issues were noted 
concerning the said payments: 

• The Board of Directors of NOCAL in their 22 May 2007 meeting mentioned the issue of 
hiring an in-house lawyer for NOCAL during the budget discussion for the fiscal period 
2007/2008. Cllr. Stephen Dunbar in that meeting suggested that there was no need to 
hire an in-house lawyer but rather retain a legal counsel. 

• The management in implementing the decision from the Board hired Cllr. Stephen 
Dunbar who was already a member of the Board of Directors to serve as retained 
lawyer of NOCAL without regards to the Public Procurement and Concession Act of 
2005 which requires a formal contract and a bidding process and prohibits conflict of 
interest. Conflict of interest in procurement is a violation of Section 131 (c) of the PPC 
Act, 2005, which states "At all times avoid conflict of interest and the appearance of 
conflict of interest, in carrying out his or her duties and shall immediately disclose any 
conflict of interest and excuse himself or herself from any involvement in the matter." 
The hiring of Cllr. Stephen Dunbar also violated Article 90 (a) of the Constitution of 
Liberia which prohibits conflict of interest. Article 90 (a) states "No person, whether 
elected or appointed to any public office shall engage in any other activity which shall 
be against public policy, or constitute conflict of interest." 

• Payment voucher* 0080 in the tune of US$3,250.00 and Voucher* 0196 in the tune of 
US$7,425.00 had no receipts attached to indicate that indeed such amounts were paid. 

• Contractual agreement underpinning the services rendered was not made available for 
audit, thus making it impossible to determine the scope of work, duration of work, 
terms of payment and compliance. 

57 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



• Procurement Committee minutes for selecting Cllr. Stephen Dunbar were also not 
made available for audit, making it impossible to determine on what basis he was 
selected. There was also no evidence of work done by Cllr. Stephen Dunbar. 

Consultancy Agreement with Cllr. Peter B. 3a I la h 

294. During the period under review, it was observed that Cllr. Peter B. Jallah, also a NOCAL Board 
member during the fiscal period 2006/2007 received an amount of US$500.00 on 26 
September 2006 on check #44546 for legal services rendered to NOCAL, even though NOCAL 
already had Cllr. Stephen Dunbar as its Retained Lawyer. It is instructive to note that the hiring 
of Board Member Peter B. Jallah to render services to NOCAL again as a consultant violates 
Article 90 (a) of the Constitution of Liberia and Section 131 (c) of the PPC Act, 2005. The 
following issues were also observed: 



Payment voucher authorizing said payment was not availed for audit. 

Details of legal services rendered were not provided. 

No contract between NOCAL and Cllr. Jallah was provided for audit. 

Payment receipts authenticating receipt of payment was also not availed for audit. 



Consultancy Agreement COMIE Consultants Inc. 

295. For the period under audit, it was also observed that NOCAL made two payments to COMIE 
Consultants INC, as evident by Payment Vouchers* 0397 dated 14 February 2008 and 
Voucher* 0584 dated 23 May 2008 in amounts totalling US$5,500.00 for Advisory Services as 
per the Invoices and payment Vouchers. However, the following issues were noted concerning 
said payments: 

• Contractual agreement by the two parties involved were not availed for audit; 
making it impossible to determine the scope of work, payment terms and date of 
completion of services performed. 

• Payment receipt for Voucher 0397 in an amount of US$3,500.00 was not attached to 
the voucher to indicate that payments were made to the consultant. 



Procurement Committee minutes selecting COMIE Consultants were also not availed 
for audit making it impossible to determine on what basis the firm was selected. 

• There was also no evidence of work done by COMIE Consultants. Certificate of 
completion indicating a successful and satisfactory completion of the consultancy 
terms and conditions of the agreement were not attached to payment vouchers as 
required by Rule 24 of the Financial Rule of the Republic of Liberia. 

Consultancy Agreement with J. Nanborlor F. Singbeh 

296. An examination of Payment Voucher* 0426 dated 1 April 2008 processed in the name of the 
Secretary of the Senate, J. Nanborlor F. Singbeh in an amount of US$2,000.00 was intended 
for the preparation of the bill of ratification in favour of Regal, Repsol and Woodside 
companies agreements for Block 8,9,15,16,and 17. The action of Senate Secretary Singbeh is a 

58 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

direct conflict of interest, prohibited by Article 90 (a) of the Constitution of Liberia and Section 
131 of the PPC Act, 2005. Further examination of the document revealed the following: 

• Request for the payment was made by Christiana N. Harmon, Human Resource 
Manager of NOCAL, without being invoiced by the payee J. Nanborlor F. Singbeh. 

• There was no evidence of work performed as copy of the bill of ratification was not 
presented for audit scrutiny as evidence to the payment voucher. 

• Payment receipt from J. Nanborlor F. Singbeh acknowledging receipt of payment was 
also not attached to the payment voucher. 

• Contractual agreement was not made available for audit, much less a material 
justification for making a payment to the Secretary of the Senate for work that he is 
already paid to perform. 

• Procurement Committee minutes selecting Singbeh were not attached to payment 
voucher. 

• It was also observed in the preceding paragraph that NOCAL hired the services of 
Board Member Stephen Dunbar for the performance of legal Services for the period 
under review. Instead of utilizing the services of the Board Member Dunbar, NOCAL 
hired Singbeh for the preparation of the bill of ratification that was to be attached to 
the agreements of Regal, Repsol and Woodside companies for Block 8,9,15,16,and 
17 to be submitted to the 52nd Legislature for ratification. Financial Rule 26 states 
that payment should not be made to serving Government employees under 
professional services. J. Nanborlor F. Singbeh, Secretary of the Senate, as a serving 
government official was paid US$2,000.00 by NOCAL in contravention of the 
Financial Rule 26. A letter was written to Senate Secretary J. Nanborlor F. Singbeh, 
but he failed to respond to my query. 

Consultancy Agreement with Aries Security Service Incorporated 

297. During the period under review, it was observed that NOCAL made several monthly payments 
to the Aries Security Service, totalling US$2,600.00 for security guard services. 

298. The following issues were observed with these payments: 

• There were no contractual Agreement between NOCAL and Aries Security Service. 

• Procurement Committee minutes selecting Aries Security Service were also not made 
available for audit, thus making it impossible to determine the basis on which they 
were selected and paid. 



59 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Risk 

299. NOCAL Board members who accepted to perform roles other than NOCAL Board roles risk 
placing themselves in conflict of interest position, a violation of Article 90 (b) of the 
Constitution of Liberia and Section 131 of the PPC Act, 2005. 

300. Non-adherence to payment terms under the various consultancy agreements could signal 
collusion on the part of management. 

301. NOCAL Procurement Committee minutes and bid documents not availed for audit could show 
lack of transparency in the award of consultancy contracts. 

302. The omission of relevant documentation on consultancies entered into by NOCAL could lead to 
loss of funds through non-performance and deficient services rendered to the Company. 

303. NOCAL could be awarding contracts to insiders in the company to the disadvantage of other 
legal businesses in the Country. 

304. NOCAL could be paying contractors for no services rendered, as there was no evidence of work 
performed (e.g. progress reports, certificate of satisfactory completion etc) and this could 
signify collusion between management and the hired consultants. 

Recommendation 

305. Marie E. Leigh-Parker, Vice President for Finance and Henry M. Gray, General Services Director 
and Fulton M. Reeves should be made to provide justification for the omissions noted with the 
consultancies granted to the six (6) individuals and firms. The justification should include 
supporting documents relating to the contractual agreements including, Procurement 
Committee minutes, bid documents and copy of certificate of completion signed by the General 
Service Director as a basis of payment. 

306. Management should ensure compliance with the dictates of Section 68 of the PPC Act on the 
awarding of consultancy contracts. 

307. Stephen Dunbar and Peter B. Jallah should be held accountable for conflict of interest and be 
sanctioned for violating Article 90 (a) of the Constitution of Liberia and Section 131 (c) of the 
PPC Act, 2005. The amounts paid to them in the tune of US$15,615.00 and US$500.00 
respectively should be recovered from them and deposited into NOCAL's account within 30 
days upon receipt of this report. 

308. Senate Secretary J. Nanborlor F. Singbeh should be made to restitute the US$2,000.00. He was 
served an audit query, but he failed to provide a response. 

Management's Response 

309. No Management's Response was obtained on this issue despite the issuance of Audit 
Observation Memorandum (AOM) and a Management Letter to Management. 

60 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

Non Existence of Internal Audit Unit (IAU) 
Observation 

310. An Internal Audit Unit (IAU) is an independent appraisal unit that examines the adequacy and 
effectiveness of controls instituted within an entity. The objective of this Unit is to assist 
management with risk analysis, appraisals, recommendations, counsel and information to 
promote efficiency, effectiveness, economy and orderly operations. 

311. The Institute of Internal Auditors (IIA) endorses the above roles of Internal Auditors. IIA 
Performance Standard 2010 (planning stage) requires the Head of Internal Audit (IA) to 
establish risk-based plan to determine the priorities of the IA's activities consistent with the 
organization's goals. The Standard further requires the implementation of the IA's plan using 
risk assessment undertaken at least annually. The inputs of Senior Management and Board 
should be considered in the process as a fulfilment of IIA Performance Standard 2010. 

312. IIA Performance Standard 2060 captioned -"Reporting to the Board and Senior Management" - 
provides that "the IA should report periodically to the Board and Senior Management on the 
internal audit activity, purpose, authority, responsibility, and performance relative to its plan. 
The reporting should include significant risks and control issues, corporate governance issues 
and other matters needed or requested by the Board and Senior Management". 

313. Reliance would be placed on the IA operations outlined if these were to be pursued and 
adhered to by NOCAL. Notwithstanding, the outlined IA functions listed above and the fact that 
the Company was established nine years ago, an Internal Audit Unit did not exist at NOCAL. 
Audit Committee neither existed at the level of NOCAL Board of Directors. 

Risk 

314. The IAU is an independent review mechanism established by Management to ensure, in a 
nutshell, the attainment of the entity's overall objectives in an orderly, efficient, economic and 
effective manner. Thus, the non-existence of an IAU is a drawback to the Company's 
attainment of its objectives. This is because abuses and misuse of Company's resources may 
not be detected and reported for corrective measures in a timely manner. 

Recommendation 

315. The Board of Directors should immediately establish an IAU and employ a qualified internal 
auditor to head the Department. 

316. The internal auditor, when appointed, should submit quarterly reports on the operations of 
NOCAL to the Board of Directors and Senior Management simultaneously. 

317. To enhance IAU reporting, findings contained in the reports should clearly indicate the financial 
and material risks that were identified, and recommendations should be provided to address 
these risks. 



61 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



318. The IAU, when established, should submit copies of their report to the Auditor-General of 
Liberia, consistent with Section 38 of the PFM Act, 2009. 

319. Reports of the IAU should be referred to the Independent Audit Committee established at the 
level of the Board. 

Management's Response 

320. The creation of Internal Audit Unit (IAU) and it relevant functions were discussed in our last 
retreat held in Grand Cape Mount County. It was planned that the IAU section would be put 
into proper prospective in the next fiscal budget for 2009/2010 and an office space provided 
since in fact we do not have enough office space. The Management has been systematically 
and on a gradual basis creating those relevant sections that are critical to its operations prior to 
the acquisition of its own facilities with more offices as provided for in its Five Year Strategy 
Plan. 

321. It was based on this that the geology section had been established which takes into 
consideration the senior geologist and the environmental geologist. Moreover, the Company's 
provision for an internal audit section in the fiscal year 2009/2010 was in line with GOL 
memorandum number EJS/MOS/RL.204. '09 section 6 entitles "Audit Committee". 

322. Among other things the audit committee is mandated to review the financial performance of 
the corporation and recommend to the Board where improvements are necessary. Also, the 
committee is given the task to contract the Corporation's independent auditors and the 
independent auditors shall report to the Board of Director. Finally, efforts are being exerted to 
obtain copy of the IIA 'S "Red Book" in order to improve our internal auditing standards". 

Auditor General's Position 

323. The Management was urged to ensure an early establishment of the IAD within NOCAL and 
make it operational with qualified internal auditors. The Auditor General supported 
management efforts in drafting a Terms of Reference for qualified internal auditor consistent 
with IIA International Professional Practice Standards. 

Absence of Financial Regulations and Accounting Manual 

Observation 

324. In accordance with good practice, a public corporation should formulate and institute a set of 
financial rules and policies, which will provide a complete and consistent basis for the financial 
administration of the corporation, with the approval of the Board of Directors. These rules and 
policies will also serve as a control tool for management and a guide for the accounting staff in 
the preparation of accurate financial statements for periodic financial reporting, to enhance 
accurate reporting, consistency and transparency. 

325. Contrary to the above, the Chief Accountant, Timothy Wiaplah, disclosed that NOCAL did not 
have financial rules and policies, and an Accounting Manual. As a result, there are no financial 
rules and policies governing the operations of the Company and outlining revenue and 

62 I Promoting Accountability, Transparency, Integrity and Fiscal Probity ISA F t 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

expenditure procedures, processes and controls. It was however noted that the Company had 
drafted what it termed as "standard operational procedures of financial practice" which was yet 
to be approved by the Board. In my view, these proposed procedures did not provide for much 
guidance as are ordinarily provided in financial rules and policies. 

Risk 

326. The absence of financial rules and policies makes the financial operations of the Company 
devoid of controls, whilst the management of revenue and disbursement of funds was left at 
the discretion and personal judgment of Management. This situation could provide 
opportunities for errors, fraud, and other anomalies. 

Recommendation 

327. Management, in consultation with the Board of Directors, should take prompt action to 
constitute a committee made up of professionals to draft financial rules and regulations for the 
approval of the Board. 

Management's Response 

328. "Our present accounting manual was modelled to include the generation of the Company's 
revenue and how payments are made in line with GAAP". 

Auditor General's Position 

329. Financial Rules and Policies serve as a control tool for management and a guide for the 
accounting staff for the effective and efficient management of the entity's resources. 
Therefore, the rules and policies should be instituted. 

330. NOCAL's contention that its accounting manual is consistent with generally accepted 
accounting principles (GAAP) is without merit. NOCAL did not even indicate which GAAP, as for 
example United States' GAAP, British GAAP, IPSAS, IFRS, etc. Furthermore, the financial 
statements, as noted in preceding sections of this report, showed that they were not prepared 
on the basis of GAAP. 

Cash and Bank 

Observation 

331. An examination of transaction records provided for audit revealed that NOCAL operated three 
bank accounts during the period under audit. The accounts include one Liberian Dollar account 
and two United States dollar accounts. 

332. The three accounts maintained by NOCAL for the period under audit were at Ecobank 
Liberia Limited. The balances of these accounts at the beginning and ending of 2006/2007 and 
2007/2008 Fiscal Year were as follows: Ref. Tables 5A & 5B 



63 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



TABLE 5A: Accounts Maintained by NOCAL (2006/2007) 



Account Title 


Name of the 


Account Number 


Opening Balance 


Closing Balance as of 




Bank 




as of July 01,2006 


June 30,2007 per Bank 








per Bank 


Statement 








Statement 












L$ 


US$ 


L$ 


US$ 


Operating 


Eco Bank 


10210030612011 




72,863.39 




23,854.74 


Account 




























Hydro Carbon 


Eco Bank 


10210030612027 








79,659.37 


Account 




























Special Account 


Eco Bank 


10210030611015 






871,059.46 




Total 








72,863.39 


871,059.46 


103,514.11 



TABLE 5B: Accounts Maintained by NOCAL (2007/2008) 



Account Title 


Name of 
Bank 


Account Number 


Opening Balance as of 
July 01,2007 per Bank 
Statement 


Closing Balance as of June 
30,2008 per Bank 
Statement 


LD$ 


US$ 


LD$ 


US$ 


Operating 

Account 


Eco Bank 


10210030612011 




23,854.74 




272,723.63 


Hydrocarbon 

Account 


Eco Bank 


10210030612027 




79,659.37 




7,693.88 


Special Account 


Eco Bank 


10210030611015 


871,059.46 




2,483,026.74 




Total 






871,059.46 


103,514.11 


2,483,026.74 


280,417.51 



333. My examination indicated that NOCAL did not maintain Cash Books for the three accounts 
maintained during the years. 

334. Bank Reconciliation Statements were not prepared for the accounts maintained during the 
period under review. 

335. It was also observed that NOCAL did not maintain separate files for each bank account. Bank 
Statements for the three accounts were being mixed up in the same Box file. This made it 
difficult to relate source documents to the respective accounts. 

336. The NOCAL Balance Sheet for 2006/7 indicated US$108,811.23 as Cash Balance for the fiscal 
year. However the bank statement revealed an amount of US$118,532.32. Annexure 7A. 
Similarly, US$1,033,358.57 was reported as Cash Balance for the 2007/8 fiscal year; the bank 



64 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



position was US$321,801.29. In the absence of bank reconciliation, the true cash positions for 
the two fiscal years were unknown. Annexure 7B 

337. NOCAL reported US$5, 279.55 in the Income Statement as Bank Charges for the fiscal period 
2006/2007. However, bank charges traced from bank totalled US$4,282.50 thereby creating a 
variance of (US$997.05). 

338. It was also observed that NOCAL reported US$19,602.00 in the Income Statement as Bank 
Charges for the fiscal period 2007/2008. However, bank charges traced from the bank totalled 
US$32,048.45 thereby creating a variance of (US$12,445.45). 

Risk 

339. The non-maintenance of cash books and non-compilation of bank reconciliation statements 
could impact the financial administration of the Corporation as follows: 

• The true cash position of the Company at any time may not be easily established. 

• Irregular dealings of the Company through the bank, such as thefts, unauthorised 
transfers and other abuses may not be promptly uncovered. 

• It could increase the risk of bank fraud by unscrupulous bank clerks and these 
fraudulent acts may go undetected. 



• Genuine errors or omissions could remain undetected. 



340. This control deficiency could therefore deny assurance that NOCAL operation of its bank 
accounts were devoid of wrongdoings. 

Recommendation 

341. The Vice President for Finance institutes Cash Books for its bank accounts, record all its cash 
movements in the cash books and prepare monthly reconciliation statements to verify dealings 
with the banks. 



342. The Comptroller should critically examine all of the omissions observed above, document any 
deviations noted and investigate them to their logical conclusion. 



343. The Comptroller should maintain separate Box files for each Bank Account. 



344. The Comptroller should review all monthly bank reconciliation statements prepared, investigate 
and document discrepancies. 



345. The Vice President for Finance should sign off the monthly bank reconciliations and provide a 
copy to the Internal Audit Unit for audit purposes. 



65 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

Management's Response 

346. 7776 1 bank reconciliation that was first prepared by Management prior to the commencement of 
the audit was based on the cash book balances that covered calendar years transactions for 
the two fiscal years. The auditors requested that we exclude transactions that did not affect 
the fiscal year. Our running cash book balances were now different from the first set of bank 
reconciliation statements prepared earlier that were based on the calendar year transactions 
and therefore had to be changed to correspond with the fiscal years' data. 

347. As a result of this and in compliance with audit for additional information being requested, we 
experience a delay in the submission of new bank reconciliation that was in line with the two 
fiscal years. However, Management has opened a new bank reconciliation file where all 
monthly bank statements are maintained with all reconciled statement attached. 

Auditor General's Position 

348. I accept management's position that it has created a new file for bank reconciliations. I 
maintain that management should perform bank reconciliations for the periods under audit and 
have them reviewed and signed off. Copies of the prepared bank reconciliations should be 
submitted to the Auditor General within one month upon receipt of this report. 

Maintenance of petty cash policies and related procedures 

Observation 

349. The Management of NOCAL operated without petty cash policy and related procedures. The 
policy and procedures define the uses to which the fund can be applied, fund's ceiling, 
authorities established for disbursements from the fund, how employees are reimbursed from 
the fund and the manner in which the fund is replenished when exhausted. Petty Cash Cashier 
normally serves as the custodian for the petty cash. 

350. Contrary to this conventional practice, the management of the National Oil Company of Liberia 
(NOCAL) designated the Human resource Manager as the Chief Custodian of petty cash instead 
of dedicated cashier. Also, neither the Comptroller nor the Vice President for Finance was 
designated as approving authority for disbursements from the petty fund. 

351. Scrutiny of the Fiscal Budget and the budget performance report for the fiscal period 1 July 
2006 - 30 June 2008 revealed that US$100.00 was budgeted as petty cash for the period July 
2006-June 2007. Management however expended US$1,800.25 and L$22,340.00 without 
approval from the Board of Directors, as no evidence of such approval was sighted. See 
Annexure 8 

352. For 2007/8, NOCAL Board made no appropriation for petty cash but Management disbursed 
L$63,999.00 through petty cash without approval by the Board of Directors, as summarized in 
the table below and Reference Annexure 8: 



66 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Table 6: Disbursement Made by Management without Board's Approval 



Fiscal Year 


Budget 


Budget 


Actual 


Actual 


Excess Over 


Excess Over 




Amount 


Amount 


Expenditure 


Expenditure 


Budget US$ 


Budget L$ 




US$ 


L$ 


US$ 


L$ 






06 July-07 June 


100.00 





1,800.25 


22,340.00 


1,700.25 


22,340.00 


07 July- 08 June 











63,999.00 





63,999.00 


Total 


100.00 





1,800.25 


86,339.00 


1,700.25 


86,339.00 



Risk 

353. The establishment of Petty Cash Fund without related policy and procedures could provide 
opportunities for abuse of liquid resources of NOCAL. 

Recommendation 

354. The President/CEO should establish policy and procedures on petty cash fund with the view of 
defining all aspects of its management. 

355. To safeguard the integrity of disbursements from the fund, fairly senior personnel such as the 
Vice President for Finance or the Vice President for Administration should be designated as an 
authority for the approval of all petty cash disbursements. 

Management's Response 

356. 7776 1 role of the Board of Directors is to provide oversight to the entity versus the role of the 
Management who Manage the daily operations of the business. The management of petty cash 
does not fall within the purview of the board of Directors, is not a budget item and is used 
primarily as a facilitating tool to allow for the purchase, payment and reimbursement of 
nominal and sundry expenses on a daily basis. Hence, there is no need for board of Director 
Approval. 



357. Petty cash purchases and expenses are accounted for through the petty cash reconciliation 
process with the use of vouchers, cash receipts, payment vouchers and other documents. 



358. The used of separate cashier to handle petty cash receipts of disbursements is not only archaic 
but a waste of company's financial and capital resources. NOCAL is not a retail organization 
that is involved in the daily handling of various amounts of cash to warrant the hiring of 
cashier. 



359. Management notes this observation and will review its petty cash approval and disbursement 
policy with a view to further understanding the risk noted. 



Auditor General's Position 

360. Management provided several contentions that are without merit and indicate management 
limited understanding of corporate governance issues. First, management contended: 



"The role of the Board of Directors is to provide oversight to the entity versus the 
role of the Management who Manage the daily operations of the business. The 

67 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

management of petty cash does not fall within the purview of the board of Directors, 
is not a budget item and is used primarily as a facilitating tool to allow for the 
purchase, payment and reimbursement of nominal and sundry expenses on a daily 
basis. Hence, there is no need for board of Director Approval." 

361. By management's contention, it admits that the Board of Directors have the responsibility to 
provide oversight of NOCAL's management. The Board therefore can decide to establish a 
monetary threshold for each expenditure category. Hence the management's contention that 
petty cash is not a budget item and therefore not under the oversight function of the Board 
cannot be sustained. The Board can decide to approve a monetary threshold as well as 
financial management and reporting requirement for petty cash. 

362. The Management also misunderstands the distinction between approval and routine, day to 
day financial management. For example, approval can be contained in Board policy setting 
monetary threshold for each transaction. But management would like to accept that it can 
determine unilaterally how much is paid through petty cash without any oversight by the Board 
of Directors. Petty Cash is a risky area that can be easily abused without clearly defined 
parameters, approved by the Board of Directors. 

363. The Management further provided explanation that clearly indicated that it lacks basic 
understanding of financial management. Management asserted: 

"The used of separate cashier to handle petty cash receipts of disbursements is not 
only archaic but a waste of company's financial and capital resources. NOCAL is not a 
retail organization that is involved in the daily handling of various amounts of cash to 
warrant the hiring of cashier. " 

364. Management's contention is not supported by evidence or known accounting practice. For 
example, management did not provide any evidence to indicate that a separate petty cashier is 
"archaic." In fact, accounting practice internationally and other state-owned enterprises 
showed that there is a separate petty cashier. In fact, accounting controls required that the 
petty cashier is bonded. 

365. Management further contention that NOCAL is not a retail organization and therefore did not 
need a petty cashier speaks once more to a rudimentary understanding of financial 
management on the part of NOCAL's officials. Multi-national corporations, such as Unisys 
where I worked, have a petty cash custodian and Unisys is not a retail organization. 
Management provided no proof that only retail organizations are supposed to have in place a 
separate petty cash custodian. 

366. Management continued to provide explanation that is not consistent with the observation. 
Management asserted: 



68 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

"Petty cash purchases and expenses are accounted for through the petty cash 
reconciliation process with the use of vouchers, cash receipts, payment vouchers and 
other documents. " 

367. The issue in the observation is not about accounting petty cash transactions. Instead it dwelt 
on policy and procedures for petty cash, as well as the need for effective checks and balances 
in the management of petty cash. Instead of addressing the lack of petty cash policy and 
procedure comprehensively, management focused its argument on how petty is accounted for. 
This further demonstrated that management did not read critically the issues raised before 
submitting responses. 

368. I therefore maintain all my recommendations, as management explanations are not supported 
by facts or accounting practice. Instead, management own explanations expose it limited 
understanding of accounting and financial management practices. 

Safeguarding of Assets within NOCAL 

Observation 

Fixed Assets not appropriately embossed 

369. Assets of the Company, such as vehicles, computers, generators, air conditions, furniture and 
other high value items, among others, did not have on them appropriate markings of 
identification numbers or code as an indication that the items are the property of the Company. 
The Company's assets were embossed with removable stickers bearing the Company's name. 
This is not an appropriate coding method as these removable stickers can easily be removed 
and unscrupulous staff/personnel could easily take away the assets. 

370. Effective control over assets is based on the efficiency and effectiveness of the accounting 
policy used. The principal issues in accounting for assets involve their identification, the 
determination of their carrying amounts, depreciation charges and impairment losses to be 
recognized in relation to the asset. 

371. Therefore, as part of the internal control measures, all assets of an organization should be 
embossed with conspicuous identification numbers to indicate ownership of the asset in the 
event of theft or dispute over ownership. 

Insufficient records on Fixed Assets 

372. Safeguarding the assets of a public corporation is an essential element of an entity's internal 
control as earlier indicated. Therefore, Management must institute requisite measures which 
must include but not limited to maintenance of Fixed Assets Registry, fixed assets ledger and a 
well documented policy on the disposal of fixed assets that will properly safeguard the entity's 
assets. 

373. Additionally, as part of my review, NOCAL Fixed Assets Registry and other documentation on 
the assets were requested to verify whether assets of the Company are properly documented 

69 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



and safeguarded, assets procured are in existence and in the name of the Company as well as 
being used for its benefit. 

374. The review noted instances where assets purchased by the entity were not properly listed in 
the Fixed Assets List. These lapses took the form of absence of information such as serial 
numbers, date of acquisition, departmental code, cost of acquisition, etc. on the Company 
Fixed Assets List. Furthermore, there was no policy on the disposal of NOCAL's Assets, fixed 
assets ledger was not being maintained as well as a depreciation schedule. As a result, I could 
not provide assurance on whether the Company's Assets have been properly safeguarded and 
accurately disclosed in the final accounts. 

Failure to follow PPC Act, 2005 in procurement of vehicles: (US$ 25,500.00) 

375. Also, I reviewed compliance with Section 55(1) (d) of the PPC Act on sole sourcing. The Act 
stipulates that public procurement by means of sole source procurement method is permitted 
only in the following circumstances, inter alia: 

• In case of extreme urgency, provided the circumstances which gave rise to the 
urgency are neither foreseeable by the procuring entity nor the result of dilatory 
conduct on its part. 

• When only one supplier has the exclusive right to manufacture the goods, carry out 
the works, or perform the services to be procured and no suitable alternative 
available. 



376. Additionally, section 54(1) of the same Act states that quotations shall be requested for in 
writing from as many bidders as practicable, but from at least three (3) bidders. Furthermore, 
the PPC Act threshold requires that contracts award shall be published when the estimated 
value of the contract is above US$25,000.00, in the case of contracts for the procurement of 
goods. 

377. Review of procurement records revealed that a budgetary allotment for the acquisition of two 
jeeps in 2006-2007 budgets was accordingly approved by the Board of Directors. On 21 June 
2007, nine (9) days to the expiration of the budget year, the Vice President for Administration 
& Finance, Marie E. Parker, wrote to the Chairman of the Public Procurement and Concession 
Commission seeking for a no objection to procure a particular GMW Hover Jeep at a cost of 
$25,500.00 for use by her office. However, it was observed that in procuring GWM Hover CUV 
5 door jeep for the Company, the quotation process and publication of contracts award as 
required under Section 54 of the PPC Act were not followed. As a result, control procedures 
provided under the sole sourcing for efficient screening and selection of lowest responsive 
evaluated bidder were not undertaken. 



378. Though the Vice President indicated in her letter to Joseph S. Neufville, Executive Director of 
the Public Procurement and Concession Commission (PPCC) that "the procurement committee 
of NOCAL in her wisdom decided to solicit (4) pro-forma invoices for analysis with the view of 
determining most advantageous quotation for selection and award of contract," only one 

70 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



invoice was actually attached to the voucher, which is also a violation of section 54(1) of the 
PPC Act. 



Vehicles Verification 

379. I was furnished with Asset List, though I called for Fixed Assets Registry of the Company. The 
Assets List provided lacked vital information including depreciation charged, book values, 
disposal details, etc. Exhibit 5 A physical verification of NOCAL assets including vehicles 
revealed the following issues: 

380. Two vehicles procured by the company were not included on vehicle listing provided to the 
audit team. Henry M. Gray, the Manager for General Service quoted the value for the two 
vehicles at US$79,740.00. The audit team requested for the underlining documentation on the 
vehicles but Management refused to disclose the details on ground that the procurement of the 
said vehicle was outside the period under audit. This assertion by management is without merit 
because there is no limit on which period I can audit. I am under legal obligation to audit 
matters that come to my attention during the course of the audit, which I have determined to 
have significant impact on the opinion that I rendered. The quoted value of the unrecorded 
assets is detailed in Table 7: 



Table 7: Quoted Value of Unrecorded Assets 



Date 


Description 


Engine # 


Serial # 


LP: # 


Assigned 
To 


Cost 


09/12/09 


TOYATA FORTUNER 


2TR-FE 


MHF-Y-X- 
59GX88013612 


BC-3021 


VPA 


45,000.00 


07/29/09 


Toyota Hilux twin- 
cabin-pick-up 


2KD-FTV 


KUN25L-PRMDHV 


BP-2317 


Utility 


34,740.00 




Total 










79,740.00 



381. Additionally, two other vehicles that were contained in the Assets Listing were not physically 
seen during the verification. Management could not provide the cost basis for the assets 
recorded on the Listing. Management did not also provide payment voucher, registration 
certificate for the assets on the Assets Listing. The US$74,685.00 quoted value of the unseen 
vehicles is detailed in Table 8: 



Table 8: Quoted Value of Unseen Vehicles 



Date 


Description 


Serial # 


Location 


Assigned To 


Cost Us$ 


04/23/2008 


Toyota Hilux twin-cabin-pick-up 


N/A 


BP-0876 


Utility 


29,995.00 


06/29/04 


Toyota Prado/Blue 


SL5335348 


BC-1967 


President/CEO 


44,690.00 


Total 


74,685.00 



382. Management indicated that the vehicles in question were disposed off, evidence of which could 
not be provided by Management after several follow-ups to the offices of the Comptroller, 
Fulton Reeves and the Vice president for Finance, Marie E. Parker. Besides these two vehicles 
mentioned above, management again indicated that five additional vehicles which I noted from 



71 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



my review of insurance documents provided for audit were also disposed off. The details of the 
five vehicles are provided in Table 9A: 



Table 9A: Vehicles Purportedly Disposed off 



No. 


Year Model 


Trade Name 


Serial Number 


Comment 


1 


2003 


Toyota L/Cruiser Prado Jeep 


JTEBK29J80-0003346 


Value 
unknown 


2 


1997 


Nissan Pathfinder Jeep 


JN8ARO554WW217601 


Value 
unknown 


3 


2003 


Toyota Hilux 4x4 D/cabinL/Cruiser Prado Jeep 


JTFDE62690-01 16604 


Value 
unknown 


4 


1995 


Toyota Corolla Sedan 


2T1AED9B25C103228 


Value 
unknown 


5 


2002 


Hyundai Elantra Sedan 


KMHDN41BP2U441666 


Value 
unknown 



383. Management failed to provide evidence of ownership of these vehicles even though they 
appeared on the insurance document but no documentary trails were maintained by the 
Corporation such as payment vouchers, registration certificate, bill of sales etc. These vehicles 
were listed on insurance document provided by NOCAL Management from Atlantic Life and 
General Insurance Company. The insurance document revealed that these five vehicles were 
insured by Atlantic Life and General Insurance Company for 2006/2007 and 2007/2008 Fiscal 
Periods. 



384. The Management could not provide evidence of disposal including listing of bidders, date of 
disposal, communication from Vice President for Finance to the president/ CEO of the 
Corporation, disposal process and procedure, approval from the Board of Directors and account 
for the proceeds derived from the disposal as prescribed by PPC Act of 2005. 

385. Part VII of the PPC Act of 2005 sets the procedure for asset disposal. Section 123(1-3) of the 
Act sets the grand rule for disposing government assets and states that: 



i. "(1) A department with obsolete stores or unserviceable equipment and plant shall 
send a disposal request to the Minister responsible for Finance. 

ii. (2) The Minister responsible for Finance shall if satisfied, authorize the head of the 
entity to convene a disposal committee comprising representatives of the entity and 
persons with relevant expertise and the board shall after carrying out inspection 
recommend the best method of disposal in accordance with Section 124. 

iii. (3) The committee's recommendations shall be subjected to approval of the head of 
entity." 



386. The Management did not provide evidence that the process leading to disposal of government 
asset as clearly defined under the above provision was adhered to. Management neither 

72 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



provided evidence that the procedures set in Section 124 (1-3) of PPC Act of 2005 were 
followed during the purported disposal of the corporation assets. Section 124 (1-3) of PPC Act 
specifies the various modes of disposing government asset. 



Unverified Equipment US$ 4,195.00 

387. Additionally, a number of equipments were not presented for verification. These are listed 
hereunder. 



388. Eight (8) pieces of equipment listed on the Fixed Assets Listing provided for audit with total 
value of US$4,195.00 as detailed in Table 9B. 



Table 9B: Equipment not Verified 



No. 


DATE 


QTY 


DESCRIPTION 


Serial* 


LOCATION 


ASSIGNED 
CODE. 


COST US$ 


1 


3/31/2009 


1 piece 


Toshiba Laptop 


18031887Q 


Finance 
Department 


NOCAL/VPF/E- 
0177 


1,600.00 


2 


2/18/2008 


1 piece 


Keyboard 


-0- 


Technical 
Services 


NOCAL/SPG/E- 
0181 


N/A 


3 


7/24/2009 


1 piece 


Laptop Toshiba 


-0- 


Serial 

#39371355q 


NOCAL/VPT/E- 
0186 


1,375.00 


4 


7/29/2009 


1 piece 


Cash Box 


-0- 


GENERAL 
SERVICES 


NOCAL//GSD/E- 
0187 


45.00 


5 


8/12/2009 


1 piece 


Desk phone 


-0- 


Administration 


NOCAL/ADM/E- 
0188 


20.00 


6 


8/11/2009 


1 piece 


Desk phone 


-0- 


Finance 
Department 


NOCAL/FD/E- 
0189 


20.00 


7 


8/19/2009 


1 piece 


Peculator 


-0- 


Administration 


NOCAL/ Adam 
/E-0190 


35.00 


8 


3/1/2010 


1 piece 


HP Laptop 


X13-04657 


Internal Audit 


NOCAL/ IA/ E- 
0191 


1,100.00 
















4,195.00 



389. Nine (9) pieces of furniture, four of which had no book value but the remaining five (5), with 
value US$ 908.50, as detailed in Table 9C: 



Table 9C: Furniture not verified 





DATE 






Serial* 


LOCATION 


ASSIGNED 


COST 


No. 




QTY 


DESCRIPTION 






CODE. 


US$ 




3/31/2009 


1 piece 


cupboard 


-0- 


President Office 


NOCAL/PO/FF- 


N/A 


1 












0167 








1 piece 


Table tamp 


-0- 


President Office 


NOCAL/PO/FF- 


N/A 


2 












168 








1 piece 


Scotch tape 


-0- 


President Office 


NOCAL/PO/FF- 


N/A 


3 






holder 






169 






9/7/2009 


1 piece 


Cupboard 


-0- 


Human Resource 


NOCAL/HRM/FF- 


304.25 


4 










Department 


0170 





73 | Promoting Accountability, Transparency, Integrity and Fiscal Probity OftC"* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 





DATE 






Serial # 


LOCATION 


ASSIGNED 


COST 


No. 




QTY 


DESCRIPTION 






CODE. 


US$ 




3/31/2009 


1 


Secretarial 


-0- 


Finance 


NOCAL/FD/FF- 


125 


5 




piece 


Chair 




Department/Secretary 


0172 






3/31/2009 


1 piece 


Secretarial 


-0- 


Administration 


NOCAL/FD/FF- 


125 


6 






Chair 




Department 


0173 






3/31/2009 


1 piece 


Cupboard 


-0- 


Finance Department 


NOCAL/FD/FF- 


N/A 


7 












0180 






5/10/2009 


1 piece 


Cafe Table 


-0- 


ES/President's Office 


NOCAL/PO/FF- 




8 












0183 


50.00 




9/7/2009 


1 piece 


Cupboard 


-0- 


Human Resource 


NOCAL/HRM/FF/- 


304.25 


9 










Department 


0190 


















908.50 



390. The Management operated without policy and procedure on Asset Management. Such a policy 
will define authorization for the procurement and disposal of assets. Besides, the policy will set 
procedure for assigning assets to department either on the temporary or permanent basis. The 
policy will also define procedure for moving asset from one department to another department 
within the corporation or outside the Company premises. 



391. Due to the lack of this basic principle of accounting, I noted during the verification that nine (9) 
pieces of equipment and nineteen (19) pieces of furniture that were reported to have been 
assigned in one Department were verified in another Department of the Company without 
indicating on the assets listing provided to the previous and current location of these assets for 
easy location. This could be accomplished through maintenance of asset movement log that 
track previous and current location of the assets within the company. These misplaced assets 
are listed in ANNEXURE 18A. 

392. Further verification also revealed that management did not record some basic equipment and 
furniture on the listing provided. The audit team requested for the full listing of asset owned 
by the Company since this was the first audit commissioned by me since the Corporation was 
established in 2000 by an Act of National Legislature. The list provided did not include sixteen 
(16) pieces of equipment and thirteen (13) pieces of furniture that were identified by the audit 
team during the physical verification as detailed in ANNEXURE 18B. 

Risk 

393. The absence an embossed identification numbers or codes on the Company's properties could 
cause difficulty in the event of theft or dispute over ownership. 

394. Substandard and old items could easily be swapped for the Company's new and expensive 
items as detachable stickers used to mark its assets could easily be removed and placed on old 
items. Thus, people may not be deterred from taking away the Company's property because 
identification marks can easily be removed. 



74 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



395. Also, the non-adherence to PPC Act provisions on sole sourcing denies assurance that 
quotations selected for supplies are the lowest responsive evaluated bids. In other words, the 
Company could not have obtained value for money. 

396. Non-maintenance of proper accounting records for NOCAL assets could lead to material 
misstatements in the entity's assets stated in the balance sheets. It may also expose the assets 
to theft and misapplication by dishonest employees. 

397. Disposal of corporate assets without due regard to the provisions of the PPC Act could be 
exploited to the detriment of NOCAL. Assets such as vehicles could be undervalued and sole 
to insiders, friends or business partners at the detriment of NOCAL and by extension 
taxpayers. 

Recommendation 

398. The President/CEO should ensure that management immediately embarks on an exercise to 
emboss all assets of the Company; this exercise should involve the update of the Fixed Assets 
Registry. 

399. A policy on fixed assets disposal, consistent with the provisions of the PPC Act on asset 
disposal, should be instituted by the Board to ensure that service potential in Company's 
assets, where possible, are exhausted before their disposal. 



400. Tender procedures outlined in the PPC Act should be strictly adhered to. 



401. Marie E. Leigh-Parker, Vice President for Finance, Fulton D. Reeves, Comptroller and Henry M. 
Gray, the General Service Manager, should be held accountable for nine (9) vehicles on, and 
outside the assets listing as well as equipment and furniture that were not presented for 
physical verification. They should also be investigated by the NOCAL's Board of Director for 
providing authorization for the disposal of, and documentation on the disposed assets. 

402. The President/CEO should ensure that management maintains a Fixed Asset Registry that is 
timely updated and include therein, profile of all assets owned. The assets' profile should 
include material alteration and repairs undertaken on the Company's assets. 

403. Marie E Leigh-Parker, Vice President for Finance, Fulton D. Reeves, Comptroller and Henry M. 
Gray, the General Service Manager, should ensure that the two verified vehicles on the 
premises of the Corporation and other verified assets during the physical verification, which 
were not included on the assets listing, are included on the Corporation Fixed Assets Registry. 
The Registry should be regularly and timely updated whenever an asset is procured and 
disposed of by the Company. 

Management's Response 

404. The observations regarding the marking of NOCAL fixed assets have been reviewed and we do 
agree that the stickers can easily be removed; as a result we have begun the process that will 

75 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



lead to all of NOCAL assets being embossed thereby making theft more difficult and their 
identification easier and permanent. All assets have been done accordingly; 

405. Regarding our Fixed Asset Registry currently being kept, we indeed recognize the absence of 
some information such as voucher numbers, checks numbers and depreciation which we did 
not deem necessary. Based however on your recommendations and the fact that in our view 
their inclusion will make your subsequent work here much easier we shall from this point 
forward add four additional columns: one for voucher #, another for check #, a third for 
disposals, and a fourth for depreciation. They have already been done; 

406. On the issue of the US$25,500.00 vehicle purchase we fail to see how the PPCC was bridged, 
since in fact we followed section 54(1) of the act and obtained not only three but four (4) 
quotations as mentioned in our communication to the Commission. However our failure to file 
all four (4) quotations with the voucher may have given rise to your observation. Please find 
attached copies of the four quotations and other documents for your perusal. Additionally, 
given the US$25,500.00 package value we should have published the contract award; be 
assured that subsequently all such contract awards shall be published; and 

407. We shall take all your recommendations into consideration as we go forward. 

408 . We acknowledge receipt of your audit observation memoranda and respond as follows: 

409. Management notes the comment on the maintenance register of a fixed asset register 
however, as the GACis aware, NOCAL s operations were on a "cash "basis for the period being 
audited hence, the asset register maintained by NOCAL which was a listing of each asset 
,/ocation ,asset number, cost, and classification was sufficient. As NOCAL moves to accrual 
basis of accounting where depreciation expense is recognized, the fixed asset register shall 
conform to all the accounting standards and includes all assets of the company whether or not 
capitalized. All items that are capitalized shall include at minimum, the date of acquisition, the 
cost of acquisition, the location, asset number, depreciation method and life of the asset. 



410. The vehicles registry with the 9 vehicles is noted. 



411. The asset listing which was initially presented to the GAC was for the specific period that was 
being audited. It is disconcerting that the GAC chooses to mention the "uncovering "of asset 
that are outside of audit period or even choose to verify asset outside of the specific fiscal 
period ending June 30, 2006 and June 30 2007 .each of the "uncovered" vehicles were 
purchased in 2009. However, in light of the "uncovery" of the vehicles (BC#3021&BP#2317) 
please note that said vehicles are assigned to the vice president for Administration and General 
Services manager, respectively. 

412. Furthermore, the two (2) vehicles (BP# 0876 & BC#1967) for utility and the presidents use 
not verified during the physical verification exercise were disposed off, as a result could not be 
verified. See Exhibit 5 for NOCAL assets/ vehicle records. 



76 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



413. In addition to these vehicles, five (5) of the company's vehicles insured with Atlantic life and 
General Insurance company had already been disposed off. However, due to the audit teams 
request for vehicles insurance records, management has provided insurance records on the 
aforementioned vehicles because the company maintains a single file for these records and 
consequently, the vehicles disposed off records were also submitted. 

414. NOCAL maintains an asset listing of the asset as well as records of the disposals of each asset. 
The company notes that risks associated with the improper records and the impact on the 
financial position of the company. 

415. 7776 1 Adoption of "CASH "Basis IPSAS by the central Government has nothing to do with the 
adoption of international financial reporting Standards (for companies) by NOCAL contrary to 
the risk noted by the GAC that "the entity might find it difficult to prepare reliable financial 
statements, including the balance sheet, in the absence of key documents outlined above" 
NOCALs adoption of IFRS includes the revaluation and reverification exercise of all the fixed 
Asset. 

416. While the verification of the assets are not within the current audit cycle, the management of 
NOCAL through the General Services Department shall make available the asset for verification. 
Updated fixed assets registers are available. 

417. The financial and accounting management of the organization and NOT the president/ CEO is 
responsible for the overall maintenance and accuracy of the accounting records and as such, 

the recommendation that the president/CEO should ensure. " will be referred to the Sr. 

Vice president-Finance for action". 

Auditor General's Position 

418. Management did not provide the referred "four (4) quotations "and" the vehicles disposed off 
records" 'to the audit team during the course of the audit or during the submission of its 
responses to me for verification. I have noted the responses of the officials of NOCAL. 
However, it is paramount that NOCAL continues to take practical steps that will ensure 
consistent and strict compliance with the PPC Act, 2005 while also exerting adequate control 
over the Company's assets. 

Irregularities noted with NOCAL's travels 
Observation 

419. My examination of disbursement vouchers and its accompanying documents on payment of 
per-diem allowances to staff of the Company, who embarked on foreign and domestic travels 
during the periods under review, revealed a number of irregularities which are considered 
below. 

Non-retirement of travel advance: US$ 136,584.78 

420. Section 23 of the Executive Travel Ordinance No.8 stipulates that upon return from abroad, 
officials of gov ernment are require d to submit to the Ministry of Finance or the finance sec tion 

77 I Promoting Accountability, Transparency, Integrity and Fiscal Probity f* il^EJ^. 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



of the travelled officers in the case of autonomous ministries and agencies, a travel 
disbursement form within one week from the date of return or before the date of the next 
journey, whichever is earlier. 

421. Contrary to these provisions of the Travel Ordinance, it was revealed from the examination of 
travelled records for the periods under review that travel advance payments totalling 
US$136,584.78 made to NOCAL's officials for various assignments outside the city of Monrovia 
were not retired upon their return. As a result, the Company's travel advances paid to them, 
commencing from January 2007 to June 2008 have been outstanding for these periods. Details 
of the unretired travel advances are provided in Annexure 14. 

Unsupported travel advance payments: US$13,421.61 

422. The guidelines and procedures regarding the travel of officials and employees on Government 
business as well as that of public corporations require, amongst others, the production of the 
following documents, which shall be submitted and attached to disbursement vouchers prior to 
the trip and upon return: 

• Letter from visiting country, indicating the purpose of mission, destination, departure 
and return dates-i.e. duration of mission. 



Copy of approved travel program by the Board in the case of the President/CEO, and 
approved travel program by the President/CEO in the case of senior and junior 
management staff of the Company. 

Complete documentation supporting all expenses incurred on account of incidental 
allowances received other than per-diem allowances. 

423. However, it was noted that several travels by officials of NOCAL between October 2006 and 
April 2008 amounting to US$13,421.61 were without supporting vouchers and the above listed 
documents. These omissions implied that prior to the trip and upon returning to base, both 
management personnel and staff did not account for and report on the foreign travels, and no 
controls were exercised to ensure that the requirements were adhered to. Travel advance 
payments were made without supporting vouchers and other related documentation. 

Over-payment of per-diem for foreign travels: US$ 15,488.00 

424. The Government of Liberia existing regulatory framework on per diem payment for foreign 
travels (i.e. Executive Ordinance No.8 of January 2007 - Policy on Per Diem Allowances for 
foreign travel by officials and employees of the Government of Liberia), set outs the per-diem 
rates for all foreign travels undertaking by employees and officials of Government and is 
applicable to State Owned Enterprises. 

425. Contrary to the policies of the above regulation, it was observed that NOCAL established and 
used rate of per diem not provided for in the extant Executive Ordinance No. 8 for payment of 
both management personnel and other personnel of the Company who undertook foreign 
travels during the period under review. That is, the rate used exceeded what is approved by 

78 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

Government. For instance, a per diem allowance given to the President and the Vice President 
for Finance of NOCAL to travel to Ghana was paid at US$350.00 per day, whilst the approved 
per diem rate established by Government is US$97.00 per day. This indicates an excess of US$ 
253.00 or 2.6 times over Government's approved per diem rate. 

426. I did not observe any documentary authority that gave NOCAL the permission to establish or 
adopt a policy on per diem other than that contained in the extant Executive Ordinance No. 8. 
The non-compliance of the existing regulatory framework for the payment made on foreign 
travels resulted in the over-payment of allowances amounting to US$15,488.00 to NOCAL 
management and staff during the period under review. 

427. In reaction to my observation, the Senior Accountant, Timothy Wiaplah, indicated that 
management was unaware of the requirements contained in the extant Executive Ordinance 
No.8 of 2007. Details of the overpayments of per-diem to NOCAL's staff and officials are 
provided in Annexure 16. 

Air tickets purchased without following PPCC Rules and Executive Ordinance 

428. The Public Procurement Law as well as the Executive Ordinance No.8 states that at least three 
(3) quotations shall be obtained from vendors and the vendor who provides the lowest -priced 
quotation meeting the delivery, shall be the one that the procuring entity should choose to 
obtain supplies from. On the basis of this provision, three quotations for the purchase of air 
tickets should at least be obtained for every transaction relating to the purchase of air ticket. 

429. However, it was observed that in number of cases of foreign travel from July 2006 to June 
2008, NOCAL management did not comply with the provisions of the PPCC and bought air 
tickets from airlines without going through the prescribed procedures. It was also noticed that 
payments were also made in the name of the President and CEO, Fodee Kromah Vice President 
Marie E. Leigh Parker, Vice President for Finance, Jacob Sandike, Vice President for Technical 
Services and Albert T. Chie. Rather than making payments in the name of the vendor, these 
key management officials chose to make payments in their names for a routine job of 
purchasing tickets. Annexure 9A 

Unreimbursed Travel Expenses in contravention of Contract Agreements 

430. Article 5, Section 5.5, paragraph 4 of the contract dated 16 April 2007 entered with Oranto 
Petroleum Ltd. for Block LB 11 stipulates that all cost of the Joint Operating Committee (JOC) 
meetings held outside Liberia shall be borne by the contractor (Oranto Petroleum Ltd.). This 
provision means that whenever there is a meeting of the JOC held outside of Liberia, Oranto 
Petroleum Ltd. is responsible for the payment of per-diem and other related expenses incurred 
by members of the Committee from NOCAL. 

431. However, contrary to the contract provisions, there were meetings held outside Liberia, which 
were attended by NOCAL's officials and travel advances amounting to US$55,044.05 paid from 
NOCAL's account and not Oranto Petroleum Ltd. There was no evidence provided that NOCAL 
has sought refund or Oranto Petroleum Ltd has reimbursed NOCAL. 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

432. In another agreement between NOCAL and the Contractor (REPSOL) dated 17 August 2005, 
which states that members of JOC shall be entitled to attendance fees (payable by the 
contractor) in an amount to be approved by NOCAL and the Contractor for attendance in 
person at meetings of the JOC and, for JOC meetings held outside Liberia, the costs approved 
by NOCAL and the Contractor, for travel and accommodation of the JOC members will also be 
payable by the Contractor. The Contractor shall select the location of the JOC meetings. All 
cost of the meetings including attendance fees, travel and accommodation costs shall be 
recoverable as Petroleum costs. 

433. Contrary to article 5, 5.7 of page # 13 of this agreement entered into between NOCAL and 
REPSOL on 17 August 2005, it was observed that payments amounting to US$71,080.28 were 
paid to officers of NOCAL as travelling per diems, hotel accommodations, air port taxes and 
visa fees, as well as air tickets for those who were attending JOC meetings outside Liberia 
during the audit period (July 1, 2006 - June 30, 2008) on behalf of the Company as detailed in 
Annexure 9B. 

Unrecorded travel advance payments: US$ 16,567.80 

434. Further review of related foreign travel payment vouchers and foreign travel listing presented 
for audit revealed that several travels made from September 2006 to November 2007 
amounting to US$16,567.80 were not recorded on the Company's list of foreign travels 
reported for the periods under review. 

Uncollected reimbursement: US$ 9,700.00 

435. It was further noted from review of disbursement vouchers for the periods under review that 
US$9,700.00 paid for the purchase of air tickets to Spain (a business trip to Repsol PYF) for 
Clemenceau B. Urey, Chairman of the Board and Dr. Fodee Kromah and Jacob Sandike, 
President/CEO and Vice President/Technical respectively, was subsequently reimbursed to the 
Chairman of the Board, Clemenceau B. Urey. A Memo dated 23 March 2007 from Marie E. 
Leigh-Parker instructed the Comptroller of NOCAL to make the payment that should have been 
reimbursed by TGS-NOPEC, the organizer of the business trip. 

436. However, it was noted that this amount had not been refunded by TGS-NOPEC. The 
information was confirmed by Marie Leigh Parker, during a follow-up. 

Inconsistencies in reported data: US$26,592.19 

437. It is the responsibility of the management of NOCAL to design and put in place internal controls 
that provide reasonable assurance regarding the reliability of financial accounting and 
reporting. The controls must ensure that the financial data is reliably authorized, processed, 
recorded and reported. 

438. My audit revealed significant material weaknesses in NOCAL's financial records. The financial 
statements for 2006/2007 and 2007/2008 had significant errors that could not be reconciled to 
the underlying accounting records. For instance: 



80 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



• Budget performance report for 2006/7 indicated US$31,971.43 of travel advances while 
the financial statements reported US$32,268.00; however, the underlying accounting 
records reported the same expenditure as US$45,020.00. These abnormalities resulted 
in under-reporting travel expenses in the financial statement by US$12,752.00. The 
difference remains un-clarified in the 2006/2007 financial statements. 

• Again for 2006/2007, the budget performance report indicated US$39,460.48 as 
payment for air tickets whilst disbursement vouchers on air tickets amounted to 
US$22,209.64. In the financial statements it was reported as US$20,824.00 of air tickets 
expense. As a result, air tickets expense is under-reported by US$1,385.64 in the 
financial statements. 

• Similarly, in July 2007- June 2008, the actual expenditure from the budget performance 
on travels advances/per diem was US$52,845.00, while payment vouchers totalled 
revealed that a total of US$61,336.00 was spent on travel per-diem; however, the 
financial statements indicated US$50,275.00 of per-diem expense, thus under-reporting 
per diem expenses by US$ 11,061.00. 

• Additionally, air tickets expenditure for the same period per budget performance report 
showed US$39,606.77, while the financial statements reported US$39,156.75 of air 
tickets expense; however, actual expense records indicated that US$ 40,550.30 was 
spent on air tickets, thus, under-reporting air tickets expense by US$ 1,393.55 in the 
financial statement. 

439. As a result of the discrepancies noted above, the company's financial statements were 
understated by a total amount of US$26,592.19 for the two financial years. 

440. These material deviations were the result of Management's inability to establish adequate 
internal controls over accounting records and financial reporting. 

Risk 

441. Management's non-compliance with the existing regulatory framework on payment for foreign 
travels could cost the Company substantially and unnecessarily, if the lapses noted are not 
addressed. This had the effect of dwindling the resources of the Company that could have 
been utilized elsewhere, towards the attainment of the Company's objects. 

442. The incidence of material misstatements in travel and related expenditures would be high, thus 
impairing the truth and fairness of the financial statements for the fiscal years under review. 

443. Long outstanding unreimbursed travel expenses made by NOCAL in line with contractual 
agreement may be uncollectable at the expense of the Company. 

444. Non-adherence to provisions of the Executive Travel Ordinances could lead to abuse of 
resources of the Company as, for instance, per diem paid could be higher than that approved 
by the GOL. 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

445. Additionally, the absence of supporting documents to retire travel advances received by 
officials and employees of the Company could deny assurance that the trips were undertaken. 

Recommendation 

446. NOCAL Board and Management should strictly comply with the Guidelines and Procedures on 
Per Diem Allowances specified in the extant Executive Ordinance No. 8 & 9 issued by the 
Government in all matters relating to domestic and foreign travels of its personnel. 

447. The amount of US$9,700.00 paid as reimbursement to Chairman Urey should be collected from 
TGS-NOPEC. 

448. The funds paid for the JOC meeting in the amount of US$126,124.33 should be refunded by 
the contractors (Oranto Petroleum Ltd. and REPSOL) as per contractual agreement with 
NOCAL. 

449. The President, Dr. Fodee Kromah and the Vice- Presidents, Marie Leigh Parker and Jacob S. 
Sandike, of the Company should be made to produce approval of their foreign trips by the 
Board, and failing this, all unapproved trips should be borne by the officials involved and should 
not stand as a charge to the Company. 

450. The officials and staff of NOCAL who undertook foreign travels and did not submit related 
travel documents should be made to provide the documentation to retire their foreign trips or 
be made to refund said funds. 

451. Management personnel of NOCAL, who were paid excess per diem as indicated above, should 
be made to refund the excess to the account of the Company. Management should henceforth 
desist from such omission. 

452. The Vice President of Finance should reconcile for the period under review, the differences 
between the budget performance report and the financial statements, taking also into 
consideration the underlying disbursement vouchers which amounted to US$26,592.19. 

Management's Response 

453. /VOCAL was unaware of the provisions of the Travel Ordinance and would hereafter obtain the 
Ordinance and act appropriately. 

454. NOCAL was unaware of the guidelines and procedures regarding travel of officials and 
employees, but would henceforth act within these guidelines and procedures. 

455. Oranto Petroleum Ltd. has been billed in its year 2 invoice for all travel expenses of the joint 
operating committee (JOC). 

456. The record has been updated on unrecorded travel advance payments. 



82 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



457. Normally, the Budget performance for the last quarter in the fiscal year is prepared before the 
end of the last month of the fiscal year. As such, figures for the last month are averages (and 
not actual) placed into the performance for the use by the board prior to the approval of the 
next fiscal year budget. However, these differences are noted and adjustments are in process 
to explain the differences in reported amount. 

458. The purchase of air tickets without following PPC Act and Executive Ordinance were done 
inadvertently. Henceforth, NOCAL will abide by all the rules of the PPCC and the executive 
ordinance". 

459. Paragraph # 384-403: Again, the Audit Team did not state their review of subsequent events, 
as such; the issues mentioned under this section are reported incorrectly. Management is now 
implementing the updated travel ordinance of 2010 rather than the 2007 Travel Ordinance 
mentioned in the report. 

Auditor General's Position 

460. Though, the Management indicated that they were unaware of the Travel Ordinance and 
henceforth would obtain same and act appropriately, I urge management to be timely in its 
implementation of the recommendations made. 

Unsatisfactory Stores Management 

Observation 

461. A substantial portion of public funds are largely invested in supplies and equipment for use by 
public institutions. As such, effective stores management is required in every set-up to ensure 
accountability and judicious utilization of public stores and equipment. Moreover, in normal 
procurement practices, Purchase Orders (POs) are prepared and placed with the most 
responsive supplier and it is expected that for proper control, records evidencing receipt and 
issuance of store items ought to be serially numbered and in an orderly manner to serve as a 
means of control and a sequence for distribution. It is also a requirement that whosoever 
received supplies on behalf of an entity must acknowledge receipt of the goods by signing a 
delivery note (DN) from the supplier of said goods, indicating that they were supplied. 

462. However, I noted from review of procurement records that there were several instances where 
POs and DNs were not prepared in the procurement and delivery of goods for the Company. I 
also noted that the Company did not maintain store ledger and inventory cards for movement 
of store items kept in the storeroom. For instance: 

• Between 1 January 2007 and 25 June 2008, payment for the supply of stationery 
and other consumable items totalling US$1,329.50 were procured without DNs 
accompanying the supplies. 

• Also, between 8 January 2007 and 25 June 2008 procurement of stationery and 
other supplies amounting to US$1,656.00 was not recorded in the Company's store 
ledger/inventory card. 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



463. The lapses implied that the Company did not receive the goods which were bought at the cost 
of US$2,985.50. Also, there was no proper control over the management of store items 
creating difficulty in tracing distribution. 

Risk 

464. Such uncoordinated and irregular procurement procedures and practices hinder effective 
monitoring and also blur audit trail. This could facilitate procurement lapses and losses. 

Recommendation 

465. The General Services Manager should ensure the preparation of quadruplicate copies of POs 
when placing orders. 

466. Management should ensure that DNs should accompany all supplies procured, evidencing the 
receipt of goods. 

467. Goods procured should be recorded in the Company's store ledger/inventory to enable easy 
tracking of distribution. 

468. Henry M. Gray, Director of General Services did not provide substantive evidence to account for 
supplies in the tune of US$2,985.50. As noted these supplies were ordered and paid for but 
there was no evidence that they were delivered. Henry M. Gray, Director of General Services 
should therefore be made to restitute. 



Management's Response 

469. Effective January 28, 2009 NOCAL instituted the use of newly designed form for use in the 
procurement and supply chain, all of which are in triplicate self-carbonated and serially 
numbered. There are two forms used for the procurement of goods and services, the Purchase 
Order (PO) which is used for vendors and suppliers who supply on account, we also have the 
Cash Payment Requisition (C. P. Req) for vendors and suppliers who require cash payment. 
Regardless of which form is used, the same process outlined in the PPC Act is use in selecting 
the most responsive bidder. NOCAL is more than certain that purchases that do not carry PO 
would most likely have CP. Req attached to them; 

470. Payment of US$91. 00 was used to purchase cleaning supplies for a general clean up drive and 
was inadvertently not entered into the inventory cards as all the items purchased were 
consumable items and were used up; except for a few packages of powder soap which were 
left with the janitor; 

471. Payment of US$15. 00 for a new USB Mouse, a USB is considered an asset and was treated as 
such. Assets are not entered into the Stationary & Supplies Inventory Cards; 

472. Payment of US$835.00 for the purchase of Stationary and Supplies, this Purchase Order was 
for a total of US$1,989.40 the items not entered into the inventory cards are non-consumable 
items which are assets and were treated as such; 



84 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

473 . Payment of US$345. 00 for the purchased of Stationary and Supplies forms part of the balance 
brought forward from the 2006 inventory cards; 

474. Payment of US$220.00 logged as payment on account is not a single PO or Cash Payment 
Requisition but rather several. There is US$30.00 for two pieces of USB Mouse. The mouse is 
an asset and was treated at such. There is a US$10.00 for the purchase of one metal desk tray 
for the VP Administration and Finance. There is a Payment for four (4) packs of ink which must 
have been supplied directly and were inadvertently not posted in the inventory cards. To avoid 
a reoccurrence, measures have been taken as of the 4th Quarter Purchase 2008/2009; 

475 . Payment of US$150. 00 for the purchase of Power Supply and Cartridge, the Power Supply is an 
asset and at such was not posted in the inventory cards again the cartridge were inadvertently 
supplied directly and not posted; and 

476. Your recommendations are noted and are being implemented". 

477. Paragraph # 340-342: the Audit Team did not indicate their review of events subsequent to the 
period under audit. If subsequent events had been considered, the Management Letter would 
have stated that this issue had been corrected by Management and all the fixed assets are now 
appropriately embossed. 

Auditor General's Position 

478. I acknowledge Management's recognition of the control deficiencies over stores and emphasize 
that the measures recommended be implemented expeditiously. I take note of management's 
explanations that it has remedied the deficiencies noted. But I still have to report significant 
deficiencies and material weaknesses as of date. I therefore maintain all my recommendations, 
as follow-up through my audit validation team will document improvement made with respect 
to audit report implementation. 

Payment of Liability to Unregistered Entity 

Observation 

479. Section 1903 of the Revenue Code of Liberia 2000 states that "any person who knowingly 
engages in any business, enterprise, trade, service occupation or profession for which an 
annual license is required under the provision of this Title or any other statute, without having 
obtained such a license is guilty of a misdemeanour and upon conviction, in additions to other 
sanctions provided by law, shall be fined not more than $25,000.00 or be imprisoned not more 
than 30 days, or both". 

480. Further, Title 14 Section 4.2 of the General Business Law, 1972 states "No person shall 
conduct or carry on a business unless he has registered such business with the Assistant 
Minister, who shall perform his duties under this chapter subject to the direction and control of 
the Minister of Commerce and industry. Any person violating the provisions of this section shall 
be subject to a fine not less than $10.00 and not more than $1,000.00 or imprisonment not 
less than one month or more than one year or both". Section 32 of the PPC Act, 2005 also 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

required that companies contracted for Government projects are duly registered and have tax 
identifications. Contravention of the PPC Act, 2005 is punishable under Section 138 (1) of the 
PPC Act, 2005. 

481. Additionally, a critical control in a procurement system is that the procuring entity ensures that 
procurement contracts are awarded to duly registered business enterprises in good standing 
with the Ministry of Finance in respect of tax payment. 

482. However, it was noted from review of procurements made by the Company that in awarding 
contracts to Finders, Inc., Management did not consider these requirements. It is evident that 
at the time NOCAL was dealing with Finders, Inc, the company was not duly registered and 
qualified under the Laws of Liberia to do business with, and as such, it was improper for 
NOCAL to deal with the said company. Finders, Inc was awarded purchase contracts to supply 
NOCAL with US$29,329.00 worth of items including furniture, panel door, split units, painting 
services, installation of split units, and office designing, furnishing and carpeting. 

Risk 

483. Dealing with un-registered entities undermines the existing laws of Liberia. Some of these laws 
are meant to facilitate revenue generation and therefore the Company's non-compliance with 
the law on business registration would not help achieve this objective. 

Recommendation 

484. NOCAL should always check the background of entities it deals with, so that the situation 
observed will not reoccur. 

485. Public Procurement and Concession Commission (PPCC) should prepare an annual list of 
qualified and reputable vendors that line ministries, agencies and departments can deal with, 
to encourage compliance with extant laws. 

Management's Response 

486. "This contract was entered into prior to our taking over. All we did was paid our liabilities. But 
henceforth, as required by the audit, we will investigate all businesses we transact with to 
ensure that they are duly registered and paying tax to the Government of Liberia ". 

Financial Matters 

Irregularities Noted In Revenue Collection 
Observation 

487. For the two fiscal years 2006/7 and 2007/8, NOCAL reported in its respective Income 
Statements total revenues of US$742,339.92 and US$ 2,627,081.23. Exhibit 6 The fiscal years 
Income Statements indicated various sources of revenues, as detailed in table 10 below: 



86 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Table 10 : Various Sources of Revenue as Reflected in Income Statements 



Description 


FY 2007/2008 


FY 2006/2007 


Revenue Sources 


Amount US$ 


Amount US$ 


Hydro Carbon Development Fund 


1,250,000.00 


250,000.00 


Social Welfare 


450,000.00 


- 


Surface Rental 


292,850.00 


- 


UL Payment 


225,000.00 


- 


Annual Training 


200,000.00 


- 


Capitalization GOL Subsidy 


161,247.34 


154,705.21 


Interest Revenue-Time Deposit 


34,188.89 


- 


Miscellaneous(other revenue) 


11,345.00 


8,568.51 


Future Revenue Sharing Scheme-TGS NOPEC 




150,000.00 


Transfer Revenue Recovered 


2,450.00 


95,000.00 


LPRC Loan Proceeds 




50,000.00 


Sensitization Revenue-Oil Companies 




15,000.00 


Upgrading Airline Tickets-TGS NOPEC 




9,666.20 


Reception Presentation 




9,400.00 


Total 


2,627,081.23 


742,339.92 



488. My analysis of the three bank accounts maintained by NOCAL at Ecobank for 2006/2007 fiscal 
year indicated that NOCAL had total collection of US$ 1,059,185.61 as opposed to the 
US$742,339.92 reported in the 2006/7 Income Statement, thus reflecting a variance of US$ 
316,845.69. Similarly, my analysis of revenues for 2007/8 fiscal year revealed total revenue of 
US$3,200,438.30; NOCAL however reported US$ 2,627,081.23 for 2007/8, again resulting in a 
variance of US$573,357.07. The revenue performance for the two fiscal years vis-a-vis my 
findings made are depicted in the table 11 below: 



Table 11: Revenue Performance Versus Audit Findings 



Fiscal Year 


Amount reported per 
Income Statement 
US$ 


Amount verified per 
Bank Statements US$ 


Variance US$ 


2006/2007 


742,339.92 


1,059,185.61 


316,845.69 


2007/2008 


2,627,081.23 


3,200,438.30 


573,357.07 


Total 


3,369,421.15 


4,259,623.91 


890,202.76 



489. The US$ 4,259,623.91 amounts verified per Bank Statements were summarized from three 
Bank Accounts operated by NOCAL for the two fiscal periods as detailed in the below Table 
12, also Annexure 5 



Table 12: NOCAL's Accounts Maintained At Ecobank 



Accounts maintained at Ecobank 


Fiscal year 


Operation 
US$ 


Hydro Carbon 
US$ 


Special L$ 


L$ 

Equivalent 
in US$ 


Total US$ 


2006/2007 


797,340.45 


246,250.00 


904,519.46 @L$58 


15,595.16 


1,059,185.61 


2007/2008 


1,140,522.20 


2,031,634.41 


1,696,901.28 


28,281.69 


3,200,438.30 



87 | Promoting Accountability, Transparency, Integrity and Fiscal Probity OftC"* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Accounts maintained at Ecobank 


Fiscal year 


Operation 
US$ 


Hydro Carbon 
US$ 


Special L$ 


L$ 

Equivalent 
in US$ 


Total US$ 








@L$60 






Total 


1,937,862.65 


2,277,884.41 




43,876.85 


4,259,623.91 



490. The failure of NOCAL Management to effect monthly bank reconciliation on the three Bank 
Accounts resulted in several unexplained understatement of cash received by the Company 
during the two fiscal periods as summarized below: 



Operational USD 

491. Transfer from TGS NOPEC dated 12/11/2007 ref#FT0734500087 in an amount of 
US$21,666.10 was not recorded in the Cash Listing provided for the audit, but was lodged at 
bank. 

492. Transfer from A2D Technologies dated 6/30/2008 ref#FT0818202584 in an amount of 
US$5,250.00 on bank Statement was also not recorded in the Cash Listing and was also not 
supported by Credit advice from the Bank, despite it appearing on the Bank Statement 
provided by NOCAL Management. 

493. Sources of Income in amounts totalling US$20,518.00 for the fiscal year 2006/2007 and 
US$10,604.00 for the fiscal year 2007/2008 from the operating account remained unknown as 
detailed Annexure 6A. 

Hydro Carbon Account 

494. It was observed that two transfers from the Hydro Carbon Funds in amounts totaling 
US$214,000.00 dated in May 2008 was transferred to NOCAL's Operating Account instead of 
the Hydro Carbon Account as summarized in Annexure 6B. 

495. Transfer dated 24 July 2007 in an amount of US$2,000.00 as reflected on the Bank Statement 
was also not recorded in the cash listing. 

496. An amount of US$586,000.00 reported in the Cash Listing as transfer to Time Deposit was not 
effected on the Bank Statement. 

497. The US$250,000.00 reported on the Comparative Income Statement for Fiscal year 2006/2007 
was credited on 6 September 2006 in the Hydro Carbon account in the amount of 
US$246,250.00, thereby creating an unexplained variance of US$3,750.00 between the bank 
and the company book balance. Annexure 5 

498. The series of credits made into the Hydro Carbon Account during 2007/2008 Fiscal Year 
amounted to US$2,031,634.41 which was reported as US$1,250,000.00 in the Comparative 



88 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Income Statement prepared for 2007/2008 Fiscal Year. This resulted in an unexplained 
difference of US$781,634.41 as detailed in Annexure 6B. 

Special Account 

499. Sources of Income reported in the Bank Statement in amounts totalling LD$364,669.54 from 
the Special Account for the fiscal year 2006/2007 was also not disclosed by NOCAL 
Management as detailed in Annexure 6C. 

Revenue Overstated in the Financial Statements 

500. Additionally, examination of receipts and credit advices provided for the 2006/7 Fiscal Year 
revealed instances of misstatements of revenue figures which I noted in the financial 
statements from verification of receipts and deposit slips. The receipts and deposit slips records 
of the company showed US$154,281.64 as GOL subsidy to the Company while US$154,705.21 
was reported in the Income Statement as GOL subsidy to the Company resulting into revenue 
variance of US$423.57, the overstatement for which management failed to provide justification. 

501. Also Miscellaneous Revenue totalling US$5,408.54 per source documents was reported at 
US$8,568.51 in the final accounts of the Company, thus over-stating miscellaneous revenue by 
US$3,159.97 in the Income Statement. Another revenue account, Future Revenue Sharing 
Scheme -TGS NOPEC was reported in the Financial Statement at US$150,000.00, while the 
source documents verified during the audit indicated the amount of US$99,970.00, again 
showing revenue variance of US$50,030.00. 

Unaccounted for revenue: US$12,324.87 

502. Additionally, I sought assurance that all income/revenues were collected and properly 
accounted for and disclosed in the financial statements. I noted from review of the Company's 
revenue records for the periods under review that management could not account for 
US$12,324.87 of its revenue generated from operations. Details of discrepancies associated 
with these revenue reported are noted below: 

• GOL subsidy covered by bank deposit slips verified during the audit amounted to 
US$168,572.21; however, subsidy was reported at US$161,247.34 by the company 
in its financial statement, thus indicating an unexplained difference of US$ 7,324.87. 

• Additionally, US$5,000.00 collected from Broadway Consolidated PLC on 10 July 
2007 as reception presentation fees were not reported in the final accounts of the 
Company. 

Risk 

503. Inconsistencies in records of revenue collection as exemplified by revenues reported in the 
Income Statements for the fiscal years 2006/7 and 2007/8 being different from revenues 
attained as derived from bank statements and other source documents are indication that 
there were material misstatements in NOCAL revenue reporting. Similarly, anomalies noted 
with transfers among the Company's Operational, Hydro Carbon and Special Bank Accounts 
and other dealings affecting the bank accounts all deny assurances that NOCAL revenue 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

reporting is reliable, and that is not financially healthy as the control deviations could be 
exploited to the detriment of the Company. 

Recommendation 

504. NOCAL's Management should set up a taskforce to investigate each and every anomaly 
reported above, document every discrepancy arising from the investigation, pursuing the noted 
discrepancies to a logical conclusion. The outcomes from the investigation should be used to 
update related accounts. The outcomes from the investigation should be conveyed to the 
Auditor-General, including the investigation and documentation. 

505. To minimize the omissions observed, remittances received from GOL and other sources should 
be reported gross in cash book as appropriate, recognising any related bank charges as 
expenditures. 

506. Furthermore, to forestall the omissions observed, the Comptroller should ensure that all 
revenue accounts are reconciled monthly; the Comptroller should review all such revenue 
accounts reconciliation statements, whilst the Vice President for Finance, sign off. 

Management's Response 

507. The variance of US$423.57 underscored in the AOM was the result of the fluctuation in the 
exchange rate between the Liberian Dollars Subsidy received from the Shareholder that was 
converted to United States Dollars and reflected in the report in support of one unit monetary 
measurement of our financial statements. During the fiscal year 2006/2007, the exchange rate 
was at that level and used by MOF in the calculation of our subsidy. The lone Shareholder then 
provided subsidy totalling in Liberian Dollars L$896,859.46 and United Stated Dollars 
US$139,417.32. The prevailing exchange rate of L$58.66 to US$1.00 was used to convert the 
Liberian Dollars portion of our subsidy. This then provided the equivalent value of United States 
Dollars US$15,287.89 which was added to our United States Dollars subsidy thereby resulting 
in the amount of US$154,705.21 and reported in the financial statements. Adjustments will be 
made if a suitable agreed foreign exchange transaction rate of conversion rate of other than 
what was earlier used is finalized during the audit period. 

508. The variance in the Miscellaneous Revenue as reported in the AOM was a little higher than 
what it should have been as a result of excluding data that did not affect fiscal year 
transactions for the audit period. The miscellaneous contribution of US$2,450.00 from TGS- 
NOPEC Ref: #542772 ICPO 21908 received on February 26, 2008 was transferred to the fiscal 
year 2006 / 2007. This was the only adjustment that may be required after your perusal of the 
attached listing. 

509. The difference of US$7,324.87 disclosed in the AOM was attributed to exchange rate between 
the United States Dollars and the Liberian dollars subsidy received from the GOL for fiscal year 
2006/2007. Initially, our financial statements were prepared on the calendar year instead of 
the fiscal year as was requested by the auditors. The last subsidy due from GOL for the fiscal 
year 2006/2007 was received on July 6, 2007 and fell in the next fiscal year. The amount are 
US$10,474.00 and L$179,839.00. The converting of the Liberian Dollars against the exchange 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



rate yielded the equivalent of US$3,100.67. When netted out against each other 
(US$10,474.00) you will arrive at the reported difference of US$7, 373.33. Other exchange 
factor between the Central Bank and the Ministry of Finance during the fiscal periods are also 
due to the difference. (See attached)". 

510. 7776 1 revenue variance indicated in Table 3 represents transfer from NOCAL s Operating Account 
to a new account titled "NOCAL Hydrocarbon Development Fund". This is the same amount 
(net of transfer charges) recorded as receipts from a Contractor (Oranto Petroleum Ltd.). The 
transfer of US$ 250,000.00 less transfer charges of US$ 3,750.00 was reported twice in both 
Table 3 and 3A. As a result, the US$ 230,821.00 reported as unaccounted for in fiscal year 
2006/2007 derived from this double reporting of the same amount. 

511. Moreover, the total revenue reported in Table 3 is inaccurate. The correct amount should be 
US$ 724,457.06 instead of USD 711,316.06 as reported. 

512. Similarly, in Annexure 5 and 6A, the amount of US$ 50,000.000 and US$164,000.00 were 
transfers from the Time Deposit Fund into the Operating Account and not additional revenue 
generated for the fiscal years 2007/2008 as reported in the Management Letter. In addition to 
this, check #608178 amounting to USD 299,965.00 less transfer charges was transferred from 
the Operating Account to the Hydrocarbon Development Fund. Therefore, the USD 549,502.33 
reported in Table 3 for the fiscal year 2007/2008 as unaccounted for is the result of double 
counting these transfers as additional revenue to the Company. 

513. We agree with this finding. The amount of US$ 214,000.00 in the Hydrocarbon Fund Account 
was transferred into the Operating Account as was noted in Annexure 5 and again repeated in 
Annexure 6A. This amount was placed on time deposit in the Operating Account because 
Hydrocarbon Funds are not generally used for operational purposes. 

5 14. Prior period adjustments in the amount from TGS-NOPEC had been noted and corrected in our 
post audit Income Statement and Cash Flows Statement for the reporting period. 

515. NOCALs receipt of funds on a one time, basis are infrequent to its operations and as such 
these funds are not recognized as an income line. Such sources include petty donations at 
workshops, refund by staff, fines etc. 



516. The Table below indicates the sources of income noted in the Annexure 6: 



Check # 


Amount (USD) 


Description 


Source 


467906 


900.00 


Excess baggage 
refund 


Board Chairman 


34957 


21.00 


Miscellaneous 
fine 


Sr. Accountant 


149553 


150.00 


Transportation 
refund 


Co. 

Superintendants 


FT 0706401108 


1,397.00 


Air tickets 


Board Chairman 



91 | Promoting Accountability, Transparency, Integrity and Fiscal Probity 



GAC? 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 







refund 




FT 0706500702 


5,000.00 


Contribution 


Donors at 
Workshop 


FT 070800782 


100.54 


Refund of travel 
advance 


VP/Administration 


FT 0712700994 


1,800.00 


Contribution 


Donors at 
workshop 



517. However, if the Audit Team had reviewed events subsequent to the audit, they would have 
noted that these revenues are now grouped and refer to as "other income" in our Income 
Statement. 

Auditor General's Position 

518. Though management provided justification in regard to the GOL subsidy, however this did not 
cure the irregularity observed, because management used unapproved exchange rate to 
convert the Liberian dollars to the United State Dollars on the day of the transaction instead of 
the CBL approved exchange rate as required by the Revenue Code of Liberia. 

519. The Management also failed to follow International Accounting Standard (IAS) 21 (revised) 
which requires that for non-group entities, transaction denominated in foreign exchange (in 
this case the Liberian Dollar (L$) since it is the currency being exchange) should be reported 
using the spot rate ruling when the transaction(s) took place. The related exchange differences 
are then determined and reported in the accounting records (exchange difference account). 
The incorporation of the exchange differences is meant to bring the foreign exchange 
denominated transactions as close as possible to their respective values, which they would 
have read if their spot rates are known and used at the time they are being reported. 

520. The Management should therefore adjust the reported figures given rise to the variances, 
failing which I would modify my report on the financial statements as appropriate. I further 
require that the management ensures that it forwards all its records on revenues in the 
financial statement, including payments such as those from Broadway. 

521. Instead of Management responding to the substantive issue, Management made this assertion 
"Moreover, the total revenue reported in Table 3 is inaccurate. The correct amount should be 
US$ 724,457.06 instead of USD 711,316.06 as reported. " 

522. I take note of Management assertion and made the necessary adjustments in "Table 3" now 
Table 12, but the adjustments made is not in the best interest of Management, as Management 
failed to cure the deficiencies noted. The noted deficiencies are about variances between the 
Income Statements and the Bank Statements. 

523. The Management provided another explanation that indicates that it does not understand 
rudimentary revenue recognition rules. Management asserted: 



92 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

/VOCAL s receipt of funds on a one time, basis is infrequent to its operations and as 
such these funds are not recognized as an income line. Such sources include petty 
donations at workshops, refund by staff, fines etc. 

524. Management has admitted that these items were not recognized as income line during the 
period under audit, because they were considered by management as "petty donation at 
workshops, refund by staff, fine etc." Incomes are not measured base on its sources rather 
recognize when earned. The decision of the management to partially recognize corporate 
income was not backed by any policy adopted by the Board of Directors or any recognized 
accounting principles. Gross income is not limited to regular cash received by the company. It 
includes income realized in any form, whether in money, property, or services. 

525. The Management therefore made assertion that funds received infrequently are not recognized 
as revenue is an indication of lack of understanding of accounting principles on revenue 
recognized. Management attempted to rely on accounting principle regarding the treatment of 
extraordinary items. Extraordinary items are adjustment to shareholders account and are not 
reported on the face of the item income. But for an item to be extraordinary, it must meet the 
twin test of being infrequent and unusual occurrence of the item. Management cannot defend 
that on time payment while infrequent is unusual. Essentially, management attempted to rely 
on accounting treatment that it does not fully understand how it is applied. 

526. It was agreed in the entrance conference with management and affirmed in the transmittal 
letter that accompanied the draft Management Letter that it is the responsibility of 
Management to provide all supporting document for audit verification and certification by the 
Auditor General. The Management failed to present to the GAC supporting evidence to 
collaborate its assertions. 

527. But management would want me to consider its subsequent income statement as a basis for 
my opinion for the period under audit. Auditing and accounting practices required management 
to make the appropriate adjustments to the financial statements being audited and present 
same to the Auditor General. For instance, as at the time of submission of management's 
response to the Draft Management Letter, management did not present to me financial 
statements for the periods 2006/2007 and 2007/2008 showing the adjustments that I have 
recommended. Mere assertions by management that these changes have been made is not 
sufficient appropriate evidence and no number of reviews of subsequent events could satisfy 
me that the adjustments have been made without proof. 

Irregular Transfer: US$ 5,040.00 

Observation 

528. Effective control of resources demands that all financial transactions relating to payments and 
transfers be backed by budgetary allocation or other requisite authority. 



93 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



529. As part of the audit, I reviewed disbursement vouchers and other relevant documentation on 
payments and transfers. My objective was to determine the appropriateness and authenticity of 
these payments and transfers. 

530. My review indicated that US$5,000.00 was transferred to Dr. Eric Neufville, Senior Geologist, 
on 21 December 2007 with a transfer charge of US$40.00 while in the United States. A 
communication dated 27 December 2007 sent to Dr. Neufville by NOCAL's Comptroller, Fulton 
Reeves, confirmed the transfer as "assistance for relocation". Though, there was no framework 
put in place by the Management of NOCAL to determine the nature of assistance that could be 
granted under its Management Assistance Plan as well as thresholds that disbursements on the 
Programme may be limited to, management paid out of NOCAL accounts such a quantum of 
money. Besides, the irregularity noted above, there was no related documentation accounting 
for the disbursement. 



Risk 

531. The granting of assistance to personnel of the Company, not on the basis of well-documented 
framework approved by NOCAL's Board, could provide unfettered opportunities for abuse of 
the Company's funds. The Management Assistance for relocation Programme may be well- 
intentioned, but without a sound framework, it is not worth pursuing. 

532. Moreover, high risk of financial irregularities exists in expenditures that are not adequately 
supported with relevant documentation. 

Recommendation 

533. The President/CEO should halt the Management Assistance Programme, pending the 
compilation and approval by NOCAL's Board, of a well-documented framework to govern every 
aspects of the Assistance for Relocation. The framework should take into consideration, the 
current financial health of the Company. 

534. The President/CEO should furnish GAC with expenditure records on management assistance 
granted to Dr. Neufville for me to substantiate, failing which, funds should be refunded to the 
Company's account. 

535. The President/CEO should ensure that financial managers strictly observe its internal 
procedures instituted to control expenditure. 

Management's Response 

536. The employment of a Senior Petroleum Geologist was based on the approval as outlined in the 
NOCAL budget for fiscal year 2007/2008. The only suitable candidate, Dr. Eric Neufville, was in 
the United States of America at the time. Due to the urgency of work, the Board resolved to 
hire Dr. Neufville and assist him in relocation. The Board instructed management to assist Dr. 
Neufville in relocating to Liberia at short notice. In light of a provision for contingency in the 
approved budget for the fiscal year, the US$5,000.00 was thereto applied. In effect, the 
payment was sanctioned by the budget and the Board. 



94 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



537. There was no perceived risk of high, unauthorized and unbudgeted expenditure, as this outflow 
was in fact in line with the budget and the Boards mandate. There was no likelihood of 
expenditure authorized at managements discretion being too high since the contingency 
provision earmarked in the budget has a limit. 

538. Management will strictly observe the voucher process internally instituted to control 
expenditure. 

Auditor General's Position 

539. Management failed to produce a policy on staff assistance for relocation to determine the basis 
on which the assistance given NOCAL staff was granted and whether the related expenditures 
are justified; as a result, the recommendations still stand. 



Irregularities noted with NOCAL's Personnel Management 



Observation 

540. Review of NOCAL payroll and other related documents revealed that management did not 
comply with some statutory requirements. A number of anomalies and instances of this non- 
compliance are explained in subsequent sections of this report. 

541. My examination of disbursement vouchers and comparative analysis of NOCAL's budget and 
financial statements for the periods under review, revealed situations where reported payroll 
expenses were not supported by records substantiating the payments. Furthermore, NOCAL's 
budget performance report on the payroll for the period under review did not coincide with its 
final accounts. Analysis of these variances are presented in the table below: 



Table 13: Variance in NOCAL's Budget Performance Vs. NOCAL's Final Account 





Budget 
Performance 
Report 


Financial 
Statements 


Variance 


Financial 
Statements 


Payroll as 
per Audit 


Variance 


2006/07 


226,050.00 


215,587.75 


18,462.25 


215,587.75 


238,309.00 


(22,721.25) 


2007/08 


211,910.00 


189,039.00 


22,871.00 


189,039.00 


258,272.00 


(69,233.00) 



542. Additionally, I noted that US$38,610.00 and US$42,350.00 paid as allowances to employees in 
2006/2007 and 2007/2008 respectively, were not reflected in the financial statements, despite 
having a budget line. The table below shows an analysis of paid allowances and budget report: 



Table 14: Analysis of Paid Allowances and Budget Report 



Fiscal Year 


Budget 
performance 
Report (US$) 


Paid allowances as per 
Audit (US$) 


Variance (US$) 


2006/2007 


52,690.00 


38,610.00 


14,080.00 


2007/2008 


33,270.00 


42,350.00 


(9,080.00) 



95 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



543. Furthermore, withholding income taxes and employees social security contributions both of 
which are deducted at source from the workers' salaries are required to be remitted to the 
Ministry of Finance (MoF) and the National Social Security and Welfare Corporation 
(NASSCORP) respectively. The social security contributions paid to NASSCORP on behalf of the 
employees represent their benefits at the time of separation from public service. 

544. Section 905 (a) of the Revenue Code of Liberia Act of 2000 states that resident persons who 
make payments to resident natural persons pursuant to a contract of employment are required 
to withhold income tax on payments to employees according to the schedule established in 
Section 200 of the same Revenue Code. Amounts withheld are to be paid over to Government 
of Liberia through the Ministry of Finance on a monthly basis, with payments due within 10 
days of the last day of each month, failing which sanctions as spelt out under Section 52 (b) of 
the Revenue Code shall be exacted. 



545. Contrary to the above provisions, my examination revealed that social security contributions 
amounting to US$1,365.35 withheld from July 2006 -January 2007 for the period of 7 to 18 
months were not remitted to NASSCORP, but were later refunded to the affected employees. 
The non-payment of social security contributions would deny the employees their benefits from 
NASSCORP when they are separated from public service 

546. Similarly, income tax deducted from employees between July 2006-June 2007 and July 2007- 
June 2008 was not remitted to the Ministry of Finance promptly as required by the Revenue 
code, and sometimes it took more than 10 months to discharge payment to the MOF. Unpaid 
Income Tax as at the time of reporting totalled US$4,313.30 covering the period of July 2006 
to June 2008 was still outstanding. When the senior accountant was contacted, his response 
was "the company just never had the money at the time to pay", but I countered that the 
taxes were deducted from employees' salaries. The table below shows NOCAL payment 
schedule for late remittance of income taxes: 



Table 15: NOCAL payment schedule for late remittance of income taxes 

Income Tax withholding payment schedule 



Months 


Amount (US$) 


Total Paid 


Date of Payment 


Check No. 


July , 2006 


5,533.70 








August, 2006 


5,478.95 


11,017.65 


Sept 7 2006 


445806 


Se pte m be r, 06 


5,747.19 








October, 2006 


6,157.65 








November, 06 


6,157.65 


18,067.49 


3 1 -J u 1-06 


486271 


December, 06 


6,157.65 








January, 2007 


6,157.60 








February, 200/ 


5,504.23 


17,824.53 


14-Jan-08 


'00673985 


Total 




46,909.67 







Inequity in Salary Payment and Job performance 

547. Also analysis of payroll and other related records from 1 July 2006 to 30 June 2008 revealed 
disparity in the salary of the Human Resource Manager and the General Services Manager, 



96 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

though both employees serve as managers in their respective departments/sections and on the 
same level in terms of qualification. 

548. It was also observed that Timothy Wiaplah who had the job title of a Senior Accountant was 
still performing duties of a junior accountant and account clerk. As a result, the risk of error 
associated with preparation of the Company's final accounts was high. 

549. In my view, the difference in salary is unjustified and could be attributed to the lack of 
approved Category and Salary Structure for personnel of NOCAL. As at 30 June 2009, the 
table below highlights the Company's top ten (10) earners: 



Table 16: Top Ten Paid Staff of NOCAL 



Name 


Position 


Regular 


Housing 


Trans. 


Entertain. 


Total 






US$ 


US$ 


US$ 


US$ 


US$ 


Dr. Fodee 
Kromah 


President/CEO 


5,000.00 


500.00 


00.00 


500.00 


6,000.00 


Marie E. L- Parker 


V.P-Fi nance 


4,500.00 


450.00 


00.00 


250.00 


5,200.00 


Jacob S. Sandikie 


V.P-Technical 
Service 


4,000.00 


400.00 


00.00 


200.00 


4,600.00 


Ophelia H- 
Saytumah 


V.P-Admin. 


4,000.00 


400.00 


00.00 


200.00 


4,600.00 


Fulton D. Reeves 


Comptroller 


2,500.00 


250.00 


00.00 


00.00 


2,750.00 


Christiana 
Harmon 


H.R Manager 


1,500.00 


150.00 


00.00 


00.00 


1,650.00 


Henry M. Gray 


G.S Manager 


1,500.00 


150.00 


00.00 


00.00 


1,650.00 


Jonathan Sogbie 


Publ. Relations 


1,500.00 


150.00 


00.00 


00.00 


1,650.00 


Veta D-Umoja 


Executive Sec. 


825.00 


125.00 


37.50 


00.00 


987.50 


Timothy Wiaplah 


Chief Acct. 


670.00 


125.00 


37.50 


00.00 


832.50 


Total 












29,920.00 



Unreported Personnel Cost US$173,944.25 

550. My analysis on the payrolls provided to me relating to personnel cost for the two Fiscal Years 
revealed that the company expended US$578,571 as opposed to US$ 404,626.75 reported in 
the Comparative Income Statements, resulting to an unexplained difference of US$173,944.25 
as reflected in the table below: 



Table 17: Unreported Personnel Cost 





Budgeted 


Reported 






Fiscal year 


Amount 


Amount per the 


Verified 


Variance US$ 




US$ 


Statements 
US$ 


Amount per 
Payrolls 
US$ 




2006/2007 


356,400 


189,039 


(275,899) 


(86,860) 


2007/2008 


356,400 


215,587.75 


(302,672) 


(87,084.25) 


TOTAL 


712,800 


404,626.75 


(578,571) 


(173,944.25) 



97 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



551. The annual appropriations presented to me for personnel cost in the budgets prepared for the 
two Fiscal Periods showed an appropriation of US$356,400.00 and US$356,400.00 for 
2006/2007 and 2007/2008 respectively. The total appropriation for the two Fiscal periods 
amounted to US$ 404,626.75 while the reported personnel cost in the payrolls amounted to 
US$ 578,571, resulted to US$ 173,944.25 as a variance shown in the above Table. 

Payment made to dismissed personnel US $735.00 

552. During the board meeting in June 2006, the Board of Directors of NOCAL resolved that the 
services of five of its employees be terminated as of 1 July 2006. The five employees were 
serving as Securities for the Company since 2004. The board decided that security services of 
the Company be turned over to a private security firm. In contravention of this resolution the 
management of the Company included the names of the affected staff on the payroll of July 
2006 as detailed in the below Table: 



Table 18: Names of Dismissed Staff Placed on Payroll 



Code 


Name 


Date of 


Date 


Monthly 


Amount 






Employment 


Terminated 


Salary 


in USD 


13 


JOHN VOKPO 


Jan. 1, 2004 


July 1, 2006 


180.00 


180.00 


16 


MASSA ARKOIL 


May 1, 2005 


July 1, 2006 


165.00 


165.00 


17 


JONATHAN REEVES 


May 1, 2005 


July 1, 2006 


130.00 


130.00 


18 


RICHARD GLAYDOR 


May 1, 2005 


July 1, 2006 


130.00 


130.00 


19 


TARPLAH HENRY 


May 1, 2005 


July 1, 2006 


130.00 


130.00 


Total 










$735 



553. The Finance Section of the Company did not provide any material justification why these 
former employees' names were placed on the July 2006 payroll of the company. 

Omitted Name from the personnel listing US$ 3,816.00 

554. I requested from the management of NOCAL to submit to me the full personnel listing of the 
company to compare with the payroll for adequate disclosure of personnel cost for the periods 
under audit. The Management submitted nineteen (19) employees names instead of twenty 
employees, which excluded the name of the Generator Operator. 



555. On account of this omission, the payroll cost for the period under review was under-stated by 
US$ 3,816.00. 



556. It is inconceivable that the Name of Emmanuel Doe, the generator operator who was employed 
since September 2004 and currently in the employ of the National Oil Company could be 
omitted from personnel listing submitted to me by the management, if the listing was 
maintained by the company and not only prepared for audit purposes. This implied that the 
company did not maintain reliable personnel listing for the periods under audit. 



Risk 

557. Non-payment of Social Security deductions would result in employees of NOCAL not deriving 
required benefits when they retired. 

98 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



558. Non-payment of Withholding Taxes timely would deny GOL revenues and cause NOCAL to pay 
unnecessary penalty for late payment. 

559. Payment made without a budgetary provision could lead to misapplication of resources for 
other activities. 

560. Differences noted between budget performance reports, financial statements and payroll 
calculations were indicative of unreliability of NOCAL's financial reporting system. 

561. Lack of coordination between NOCAL's Personnel Division and the Finance Office could lead to 
payroll abuses. 

Recommendation 

562. The Vice President of Finance should immediately pay the withholding taxes it defaulted on to 
the Ministry of Finance along with the necessary penalty for late payment and refrain from late 
payment of withholding tax henceforth. 

563. The Vice President of Finance should also immediately pay the Social Security deduction it 
defaulted on to NASSCORP and refrain from late payment of Social Security henceforth. 

564. The Vice President of Finance should undertake immediate exercise to reconcile its financial 
statements and its underlying records, and investigate all variances arising thereafter. 

565. The Vice President of Finance should ensure that all officers handling personnel, payroll and 
other related assignments maintain adequate and up to date records. 

566. The Vice President for Finance and the Comptroller should account for the amount of US$735 
paid in July 2006 for five employees whose employment status was terminated by the Board of 
Directors of the Company in June 2006. 

567. The Vice President of Administration should periodically update personnel listing and ensure 
that all bona-fide employees, including Emmanuel Doe, are on the listing for the respective 
years. 

Management's Response 

568. The budgets provision for the settlement of salary arrears due former employees was done 
under debt servicing account in fiscal year 2006/2007 along with other domestic debt owed by 
previous administration and submitted same to GOL through the Ministry of Finance for 
settlement. On September 18, 2007, the Ministry of Finance wrote NOCAL informing it that 
liquidation was to take place at the end of the third quarter of fiscal year 2007/2008. 

569. Based upon this assurance and guarantee from our Lone Share Holder, our creditors were then 
told that full payment was to be made at the end of December 2008. Since indeed assurance 
was provided, second budget provision for the same line item could not be made for in fiscal 
year 2007/2008 but instead to honor our obligation pending a remittance from the Share 
Holder upon the instruction of the Board of Directors. 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

570. The payroll includes the basic salary and allowances i.e. (housing, transportation, and 
entertainment). The net payroll amount for which cash was paid is reported in the cash flow 
statements. The income tax liability that has not yet been paid is reported in the Balance Sheet 
under the Liabilities Section. The gross payroll amount which takes in consideration both the 
basic salary and allowances is reported in our budget performance report. Since payment of 
statutory withholding taxes due GOL at the end of the audit period June 30, 2008 have already 
been remitted to the Ministry of Finance on January 2, 2009, and monthly income taxes are 
also now been paid every month, adjustment will be made. 

571. Also, the payroll cost of those employees that were serving as security guards was charge to 
our Hired Guard Services Account under our recurrent expenditure. The allowances which 
consist of housing, transportation and entertainment allowances were added to the payroll to 
reflect the actual earnings of our employees. The actual amount of cash paid for the net payroll 
that includes both the basic salary and the allowances is reported on the Cash Flow Statement. 

572. The income tax liability portion deducted from the earnings and due GOL is reported in the 
Balance Sheet and the gross payroll figures is likewise reported in the budget performance 
report. Reconciliation and adjustment of the differences will be made since in fact we have the 
tax component that due at the end of fiscal year 2007/2008 as mentioned below. 

573. As you may be informed of and prior to Dr. Eric Neufvilles death, he indicated that he did not 
travelled with most of his document when he was been relocated back to Liberia to take up 
assignment to NOCAL and that HIS DOCUMENT WOULD HAVE ARRIVED LATER. For Marie E 
Parker and Fulton D. Reeves, they have been requested to provide the necessary missing 
credentials when they contact their respective over sea universities. 

574. 7776 1 disparity between the Human Resource Manager and General Services Manager has been 
corrected in our supplementary budget which took effect April 1, 2009. However, it must be 
noted that the Human Resource Manager has longer tenure in the Company and long working 
experience. 

575. Withholding taxes due GOL at the end of the audit period June 30, 2008, have already been 
fully remitted to Ministry of Finance on January 2, 2009, and monthly income taxes are also 
now been paid every month to the Ministry of Finance. The exercise to reconcile the budget 
with the financial statement has also now begun. As mentioned earlier, currently, NOCAL is 
paying its monthly income taxes to GOL. The current fiscal year budget includes all capital and 
operational expenditure needed to be incurred and made that will be disclosed as per account 
type in the financial statement". 

Auditor General's Position 

576. I request Management to provide me the Board's resolution/approval on the payment of salary 
arrears that were not budgeted. None of management explanations cured the deficiencies 
noted. 



100 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

Irregularities Noted with the Disbursement of Funds 
Observation 

Unsupported payments: US$ 101, 512.52 

577. The requirement to conform to regulatory framework demands that all public funds disbursed 
should be duly accounted for by ensuring that expenditure undertaken by Government 
Ministries and Agencies are adequately supported by valid and approved vouchers and 
corresponding supporting documents. 

578. On the basis of the above, I reviewed disbursement vouchers (DV) and the related supporting 
documentation. However, it was discovered that US$41,980.07 paid to General Revenue 
Account of the GOL representing customs charges that was not supported by relevant DVs and 
approved by the appropriate authorities. 

579. Further analysis and review of NOCAL's budget and DVs for the two fiscal periods revealed a 
total of US$54,172.45 which was expended without relevant DVs to support the expenditure. 
This amount constituted two budget items, bearing the titles "Others" & "Accrual expenses" 
recorded under Recurrent Supplies & Services in the Budget Performance Report for Fiscal 
Years 2006/2007 and 2007/2008. I did not obtain any voucher acknowledging code for each of 
the budget line items mentioned to enable me determine expenditure made under these line 
items. 

580. In an attempt to provide clarification on the issue, the Senior Accountant, Timothy Wiaplah 
could only provide me with definition of the line items. 

581. Additionally, a bank transfer of US$5,360.00 through Barclays Bank PLC to INK Publishing, an 
international publishing company based in the United Kingdom for advertisement for the 
company was without payment voucher to support the disbursement. In the absence of 
supporting voucher, I could not determine the regularity of these transactions. 

Unauthorized Expenditure: US$ 32,964.79 & L$ 3,870.00 

582. As part of its internal control procedures, NOCAL prepares disbursement vouchers which 
require the approval of the Vice President for Administration/Finance and President/CEO 
respectively to legitimize the expenditure undertaken by the company. This is the standard 
procedure for authorizing expenditure in the Company. 

583. It was observed, on the contrary, that payments totalling US$32,034.79 & L$2,470.00 were 
made without the approval of the President/CEO, Dr. Kromah. It was also noted that payments 
amounting to US$930.00 & L$ 1,400.00 were made without the signature of the Vice President 
for Administration and Finance, Marie E. Parker. These lapses implied that Management did not 
exercise controls over all disbursements made from the company's account. 



101 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Irregular Payments to Third Party: US$ 16,578.19 and L$ 15,315.00 

584. Financial Rule # 23 of the Government of Liberia states that payments for 'Goods and Services' 
provided/rendered shall be made only to the vendor/service provider. This procedure implies, 
for instance that when a service provider/vendor deliver goods/services to a government 
entity and payment thereto is generated from the entity's account, the payment shall be made 
to the service provider or vendor who supplied the goods or services and not to a third party. 
Also, Rule # 48 of Government Financial Rule states that all payments on account of various 
allowances, travel advances and professional services rendered shall be paid to the individual 
/organization concerned. 

585. Contrary to these provisions above, I noted from review of DVs for the periods under review 
that payments amounting to US$16,578.19 & L$15,315.00 were made to third parties for 
onward disbursement to intended beneficiaries. In almost all cases observed, payments in 
question were made to NOCAL's employees. However, I did not sight any evidence to show 
how the said amount was disbursed to the intended beneficiaries. Details of the irregular 
payments to the third parties are provided in Annexure 17. 

Inter-Ministerial Committee 

586. Further review of NOCAL Income Statement for 2007/2008 indicated that NOCAL reported a 
total amount of US$33,500.00 for Inter Ministerial Committee, whilst PVs and related 
documents verified instead indicated an amount of US$29,500.00 expended on the Committee, 
thus leaving an unexplained and unsupported expenditure of US$4,000.00. This meant that 
management could not provide supporting vouchers and documentation to account for 
US$4,000.00 reported in the company's final accounts. With the deviation observed, I could not 
assure that the Inter- Ministerial Committee expenditure reported in the Income Statement was 
valid and complete, and the amount in question was expended in the interest of the Company. 

Risk 

587. In the absence of DVs to support expenditure, the validity or authenticity of transactions 
undertaken could not be vouched and no assurance would be derived that the funds were 
applied to the intended purposes. 

588. Management's failure to support its expenditures reported in the year-end financial statements 
could deny assurance that NOCAL financial statements were true and fair. 

Recommendation 

589. The Vice President for Administration and Finance should establish strict Control procedures 
regarding the signing and approving of DVs within the Company. 

590. The Vice President for Administration and Finance should also ensure that the practice of 
making payment to third parties is stemmed as it is prohibited by the Government's established 
Financial Rules. 



591. Additionally, the recipients of the total amount of US$16,578.19 & L$15,315.00, who did not 
provide evidence regarding how the funds were disbursed to the intended beneficiaries, should 

102 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



be made to restitute the amounts as they did not account for the funds during the course of 
the audit. 

592. The Vice President for Finance, Marie E. Parker and Comptroller Fulton Reeves did not provide 
substantive documentation to account for US$54,172.45 that was not supported by 
documentation and therefore should be made to restitute, in the absence of full documentation 
to account for the funds. 

Management's Response 

593. The appropriate relevant authorities approved the bank forms required to obtain a managers 
check in favour of the General revenue Account of the GOL for custom charges. NOCALs copy 
of the bank managers check form served as our corresponding supporting document for the 
transaction through the DV was not prepared. But as was indicated and recommended to us 
during the audit process, NOCAL now prepared both the disbursement voucher and the bank 
forms duly signed by GOL. 

594. NOCAL is not provided with duty free services and as such, these payments were for custom 
charges on vehicle ordered for after a competitive bidding process and won by Cape Logistics & 
equipment Inc. With the observation of the GAC audit signed in process, disbursement 
vouchers relating to managers check are now being prepared and duly signed by authorities 
including the bank forms as well before payment to the General Revenue Account is made. 

595. 7776 1 US$5,360.00 for INK Publishing was for a due diligence AD on the ratified oil blocks and 
payment was wired through the bank. The bank telex transfer form was duly signed by the 
authorities and NOCAL s copy served as the corresponding supporting document along with the 
invoice from INK Publishing. Again, as observed and recommended during the audit process, 
NOCAL now follows the practice of first preparing the disbursement vouchers for all direct 
wired of improving our internal control procedures as indicated by the GAC audit. These 
internal control procedures were put in place prior to the recommencement of the GAC audit. 
With these observations and recommendation, we have improved our procedures as stated 
earlier. 

596. The internal control mechanism procedures for fund to be paid required two of the three 
signatories to the account. These signatories are the President/CEO, Vice President for 
Administration/finance and the Vice President for Technical Services. In the absence of any one 
person, the other persons signature is required before payment is made. 

597. The signature made as indicated on our accounts document required two of the three 
signatories and does not limit the signing of disbursement vouchers to only the President/CEO 
and the vice President for Administration/Finance. If you were to verify the checks indicated in 
the AOM, you would have seen either two of the three signatures on each checks indicated in 
this authorities signatures should have appeared on the disbursement vouchers under 
reviewed. The bank does not honour only one signature on our checks written but, always two 
signatures. 

103 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



598. 7776 1 irregular payment-third party referred to in the AOM are mostly reimbursement especial 
those for courier services, vehicle maintenance, vehicle repairs, and excess baggage. During 
the Private Sector forum organized in the United States, the registration of delegates was done 
on credit cards. The Chairman of the Board of Directors used his credit cards which ensured 
our delegates registration for the forum. After the meeting, reimbursement was made to him. 

599. Courier Services to facilitate the document needed for our presentation was through DHL and 
the Vice President for Administration/Finance was reimbursed for personal money spent. 
Vehicle maintenance and repair works were also reimbursed to those staff that personally 
spent their own money when there was a breakdown of their assigned vehicle due to the 
deplorable and bad road condition in the country then and likewise the illiquid state of the 
company then. 

600. A newspaper vendor was hired to supply NOCAL all of the different newspapers. Eco-Bank 
required that he either presents a driver license or a passport before encashment of his check 
neither of which he had. As a result and to ensure that he supplied us every day, the 
receptionist then who had a bona fide NOCAL ID. card was designated to ensure that we get 
our regular supply and thereafter pay him for his services. 

601. The rest of the other vendors were not willing to open a credit line for us, due to the general 
investment climate in the country. The economy had not picked up and most suppliers were 
opting for sale of their goods and services in cash. Given this uncertainty, internal control 
procedures were adopted and receipts were obtained for the services provided. 

602. The budget performance report was structured and classified to mainly account for the 
summary of the accounts in the financial statement to suit our reporting purpose and better 
understanding in line with Board of Directors. The difference in the financial statement 
accounts and the budget performance summary accounts were listed as others. 

603. The amount reported under this title included more than one expense account. Again, as was 
noted and recommended while the audit was in process, the budget performance report now is 
structured in line with the approved budget on line items basis. Others as reported on budget 
performance report included figures charged to annual incentives, account payable, car rental 
and income tax expenses. 

604. Initially, these accounts not provided for under our budget because we anticipated that the 
GOL would have settled its outstanding domestic debt to NOCAL, but as the fiscal periods 
unfolded, these obligations had to be made and were then put under the performance title 
others. " 



605. Paragraph #426-428: We now have functioning and effective storeroom procedures. Thus, all 
our procurement and delivery of goods are accompanied by Purchase Order, Delivery Report 
and Receiving Note. Due to the Audit Teams failure to review events subsequent to the 
periods under audit, this issue is again reported incorrectly in the Management Letter. 



104 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

Auditor General's Position 

606. Management's response is duly noted. However, it should ensure that the recommendations 
are implemented to enhance the efficiency and accountability in the management of public 
funds. 

607. The reference paragraph #426-428 in the report are management's own admittance to audit 
findings where management stated that some storeroom items were inadvertently not posted 
and management was taking note to remedy the problem. Again, I maintain my 
recommendation, as management is indicating that I was under obligation to review 
subsequent events that was not brought to my attention with supporting evidence. 

608. But in order for management's contention to stand with respect to subsequent events, 
management needed to show the corrections it has made on transactions in the period under 
audit that make the financial statements and accompanying notes and disclosure fairly stated. 
Once again, merely indicating a review of subsequent events is not sufficient appropriate 
evidence to cure significant deficiencies and material weaknesses reported as of date. 

Post Audit Issues-TGS-NOPEC Payment 

609. I am however contented to note that TGS-NOPEC had, in connection with the audit, remitted 
US$1,266,102.59 (Ref: Exhibit 1) out of US$1,655,965.36 assessed by the audit as 
outstanding revenue since 2002 into NOCAL's account and have also made significant 
improvement in reconciling NOCAL's account and remitting the share of revenue due NOCAL at 
prompt. This development deriving from the outcome of the audit was disclosed to me by 
NOCAL's President/CEO after the said amount was deposited into NOCAL's account. 

Management's Responsibility for Financial Statements 

610. Management of NOCAL is responsible for the preparation and fair presentation of those 
financial statements in accordance with International Financial Reporting Standards (IFRSs). 
This responsibility includes designing, implementation and maintenance of internal control 
relevant to the preparation and fair presentation of the financial statements that are free from 
material misstatement, whether due to fraud or error, selecting and applying appropriate 
accounting policies and making accounting estimates that are reasonable in the circumstances. 

Auditor-General's Responsibility 

611. My Responsibility is to express an opinion on those financial records based on the audit. 
Audit Scope 

612. I conducted the audit in accordance with auditing standards of the International Organization 
of Supreme Audit Institutions (INTOSAI). An audit includes examination, on a test basis, of 
evidence relevant to the amounts, disclosures and regularity of financial transactions included 
in the financial statements. It also includes an assessment of the significant estimates and 
judgments made by NOCAL Management in the preparation of the financial statements, and of 
whether the accounting policies are adequately disclosed. 



105 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



613. I planned and performed my audit so as to obtain all the information and explanations which I 
considered necessary to provide me with sufficient and appropriate audit evidence to give 
reasonable assurance that the financial statements are free from material misstatement, 
whether caused by error, fraud or any other irregularity and that, in all material respect, the 
income and expenditure have been applied to the purposes intended by NOCAL's Board, and 
the financial transactions conform to the authorities which govern them. In forming my 
opinion, I also evaluated the overall adequacy of the presentation of information in the 
financial statements. I believe that my audit provides a reasonable basis for the audit opinion. 

Basis of Opinion 

614. The contract between TGS NOPEC and NOCAL was characterized by several irregularities. 
Refusal by TGS-NOPEC management to make available all the general ledgers and underlying 
records denied assurance that all the revenues collected on behalf of NOCAL was adequately 
captured, reported and shared. 

615. The revenue distribution agreement between TGS-NOPEC and NOCAL was marred by 
irregularities, thus denying the complete reporting of revenues in the final accounts of NOCAL. 
Furthermore, the contract agreement was not transparent, as amendment was based on verbal 
agreement between TGS-NOPEC and NOCAL. 

616. Fraud in the form of bribery was noted, such as the irregular payments of "lobby fees" to 
influence the passage of two concession contracts. A significant portion of the funds provided 
for lobbying fees remained unaccounted for. 

617. There was no acceptable basis of accounting and measurement focus for the financial 
statements produced for periods ending 30 June 2007 and 2008. This means that the 
accounting for financial transactions was not done consistent with any generally accepted 
accounting principles. 

618. A large number of undocumented transactions, compounded by inconsistencies between 
amounts reported in the financial statements, the budget performance report and on the bank 
statements. Figures reported also on the financial statements were not duly supported by 
underlying records and documentations. 

619. A lack of performance of basic accounting functions and controls that would enhance the 
reliability and integrity of the financial information contained in the financial statements. For 
instance, there was poor storage management and a lack of regular bank reconciliations, thus 
denying assurance on the cash position of NOCAL. 

620. Internal controls were noted to be severely weak. There was no assurance that value for 
money was achieved in the procurement of works and services, and the regularity of multiple 
transactions was observed as being lacking. 

621. In all manner of respect, the financial management at NOCAL was characterized by fraud, 
waste and abuse that cast serious doubts on the final accounts produced by NOCAL. All this 

106 | Promoting Accountability, Transparency, Integrity and Fiscal Probity CftC™* 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

was made possible because of a weak control environment evidenced by weak oversight by the 
Board of Directors and severely weak internal control systems, which jointly led to the 
production of financial statements that were grossly unreliable. 

Auditor-General's Opinion 

622. In my opinion, because of the significant uncertainties and disagreements arising from the 
matters listed above, the financial statements do not present fair view of the financial position 
of NOCAL as at 30 June 2007 and 2008 and the results of its operations and cash flows for the 
years then ended in accordance with International Financial Reporting Standards, or any other 
generally accepted accounting principle (GAAP). 

Statement of Accountability 

623. In this report, it is required that I hold people accountable for public monies entrusted to them 
for the purposes of providing services to the taxpayers. Section 53.7 of the Executive Law of 
1972 defined the minimum reporting requirements in my audits. Section 53.7 requires me to 
report the following: 

• Any officer or employee who has willfully or negligently failed to collect or receive 
monies belonging to the Government. 

• Any public monies not duly accounted for and paid into an authorized depository. 

• Any appropriation that was exceeded or applied to a purpose or in manner not 
authorized by law. 

• Any deficiency or loss through the fraud, default or mistake of any person. 

• Inadequate or ineffective internal control of public monies and assets. When appropriate, 
the report shall also include recommendations for executive action or legislation deemed 
necessary to improve the receipt, custody, accounting and disbursement of public 
monies and other assets. 

624. Overall, both financial and administrative activities undertaken by NOCAL's Management during 
the period under review were characterized by a number of financial irregularities and control 
deficiencies. The irregularities noted amounted to US$406,384.26 and L$15,315.00. The 
irregularities noted were derived from irregular payments on foreign travels, Board 
expenses, lobbying fees and unreported revenues as well as anomalies in the procurement of 
goods and services undertaken by management, which are yet to be accounted for. 



107 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

Acknowledgement 

625. I acknowledge the cooperation and assistance provided to the GAC Audit Team by the NOCAL 
Management, staff and TGS-NOPEC during the audit. The efforts and commitment of GAC staff 
in conducting the audit and reporting are also acknowledged. 




John S. Morlu, II. ^ 
(Auditor-General, RL) 



April 2011 



108 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 



GAC? 



~ V 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Accountability Schedule Annexure 1 



No. 


Accountability Issue 


Reference 


Responsible Officers/ Institution 


Position/Status 


Amount (US$) 


Amount (L$) 


1 


Irregular payments for lobbying fees 


Paragraph 153 


Alomiza Ennos Barr 


Member of the National 
Legislature of Liberia 
(District #1 
Representative) 


40,000.00 




2 


Irregular payments for lobbying fees 


Paragraph 154 


James Kaba 


Chief Clerk of the House 
of Senate 


1,500.00 




3 


Payment, made to the National 
Legislature as lobbying fees, authorized 
from NOCAL's account without Board's 
approval. An amount which the 
Legislators have denied receiving from 
him. 


Paragraph 156 


Dr. Fodee Kromah 


CEO/President 


76,900.00 




4 


Income taxes that the Company 
defaulted in paying, should be paid to 
the Ministry of Finance 


Paragraph 229 


NOCAL 




10,025.54 




5 


Non-deduction of tax from board fees 


Paragraph 230 


Marie Leigh-Parker, Jacob S. Sandike, 
Fulton Reeves, Christina Harmon & 
Timothy G. Wiaplah 


Vice Presidents for 
Finance, Vice President 
for Technical Services, 
Comptroller, HR 
Manager & Accountant 


3,100.00 




■ 


Money received as Board fees while at 
the same time serving in the capacity of 
CEO/President 


Paragraph 231 


Fodee Kromah 


Former President/CEO 


12,500.00 




7. 


Irregular payments, purportedly 
representing bonuses, to Board 
Members 


Paragraph 232 


Refer to Exhibit 4 


Former Board Members 


14,500.00 




8. 


Transaction cost with businesses that 
could not be located 


Paragraph 279 


Marie E. Leigh-Parker, Fulton M. 
Reeves & Henry M. Gray 


Vice President for 
Finance, 

Comptroller & 


12,630.00 





109 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



No. 


Accountability Issue 


Reference 


Responsible Officers/ Institution 


Position/Status 


Amount (US$) 


Amount (L$) 










General Services 
Director 






9.. 


Dealings suppliers who confirmed that 
they had no record of business dealings 
with NOCAL 


Paragraph 281 


Marie E. Leigh-Parker and Henry M. 
Gray 


Vice President for 
Finance & 
General Services 
Director 


7,553.25 




10 


Money received for legal services while 
at the same time serving as Board 
Member 


Paragraph 306 


Stephen Dunbar 


Former Board Member 


15,615.00 




11 


Money received for legal services while 
at the same time serving as Board 
Member 


Paragraph 306 


Peter B. Jallah 


Former Board Member 


500.00 




12 


Irregular Payment 


Paragraph 307 


J. Nanborlor F. Singbeh 


Secretary of the Liberian 
Senate 


2,000.00 




13. 


Uncollected reimbursement for financing 
business trip of NOCAL officials to Spain 


Paragraph 447 


TGS-NOPEC. 


Hired Gas & Oil Data 
Gathering Entity 


9,700.00 




14 


Unreimbursed travel expenses in 
contravention of contract agreement 


Paragraph 448 


Oranto Petroleum Ltd. and REPSOL 


Contractors 


126,124.33 




15 


Supplies ordered and paid for which 
there was no evidence that they were 
delivered 


Paragraph 468 


Henry M. Gray 


General Services 
Director 


2,985.50 




16 


Failure to provide supporting documents 
to acquit disbursements made 


Paragraph 591 


Purported Vendors 


Reference Annexure 17 


16,578.19 


15,315.00 


17 


Transaction not supported by 
documentation 


Paragraph 592 


Marie E. Parker & Fulton Reeves 


Vice President for 
Finance & Comptroller 


54,172.45 






Total 








406,384.26 


15,315.00 



110 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



ANNEXURE 2 



NOCAL TGS REVENUE RECALCULATION 

Analysis of Revenue Sharing Report Issued by TGS-NOPEC 

January 2002-December 2008 





MOU 


Contract 


Sales 


NOCAL 


NOCAL Revenue Share 


NOCAL Revenue Share 


TGS% 


TGS Revenue Share 


TGS Revenue Share 


Client 


Period 


Date 


Amount 


% per audit 


Received 


per audit 


per audit 


Received 


per audit 














University of Utah 


2002 


9/17/2002 


14,829.40 


50% 


1,482.94 


7,414.70 


50% 


13,346.46 


7,414.70 


Repsol 


2002 


4/3/2003 


198,907.31 


50% 


19,890.73 


99,453.66 


50% 


179,016.58 


99,453.66 


Repsol 


2002 


12/30/2003 


281,641.67 


50% 


28,164.17 


140,820.84 


50% 


253,477.50 


140,820.84 


Woodside 


2002 


12/30/2003 


511,842.50 


50% 


51,184.25 


255,921.25 


50% 


460,658.25 


255,921.25 














Sub-total 


1,007,220.88 


100,722.09 


503,610.45 


906,498.79 


503,610.45 














Oranto 


2004 


3/19/2004 


555,430.13 


50% 


55,543.01 


277,715.07 


50% 


499,887.12 


277,715.07 


Regal Petroleum 


2004 


4/27/2004 


100,000.00 


50% 


10,00.00 


50,000.00 


50% 


90,000.00 


50,000.00 


Repsol 


2004 


6/16/2004 


378,396.57 


50% 


37,839.66 


189,198.29 


50% 


340,556.91 


189,198.29 


Regal Petroleum 


2004 


10/22/2004 


336,002.23 


50% 


33,600.22 


168,001.12 


50% 


302,402.01 


168,001.12 


Broadway 


2004 


11/30/2004 


869,500.00 


50% 


86,950.00 


434,750.00 


50% 


782,550.00 


434,750.00 














Sub-total 


2,239,328.93 


213,932.89 


1,119,664.48 


2,015,396.04 


1,119,664.48 



Regal Petroleum 


2004 


1/13/2005 


599,170.38 


10% 


59,917.04 


59,917.04 


90% 


539,253.34 


539,253.34 


Oranto 


2004 


2/7/2005 


314,315.00 


10% 


31,431.50 


31,431.50 


90% 


282,883.50 


282,883.50 


Esso 


2004 


10/25/2005 


207,483.60 


10% 


20,748.36 


20,748.36 


90% 


186,735.24 


186,735.24 
















ExxonMobile 


2004 


8/29/2007 


433,322.03 


10% 


43,332.20 


43,332.20 


90% 


389,989.83 


389,989.83 


ExxonMobile 


2004 


10/29/2007 


1,371,877.50 


10% 


137,187.75 


137,187.75 


90% 


1,234,689.75 


1,234,689.75 


ExxonMobile 


2004 


10/29/2007 


886,336.50 


10% 


88,633.65 


88,633.65 


90% 


797,702.85 


797,702.85 


Anadarko Petroleum 


2004 


12/20/2007 


52,056.29 


10% 


5,205.63 


5,205.63 


90% 


46,850.66 


46,850.66 


Anadarko Petroleum 


2004 


12/20/2007 


1,651,742.31 


10% 


991,045.39 


353,122.41 


90% 


66,069.92 


1,298,619.90 
















Sub-total 




5,516,303.61 




1,377,501.52 


739,578.54 




3,544,175.09 


4,776,725.07 


TGS recoup 6.4million 










6,400,000.00 



111 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Revenue sharing without approved agreement 


5/30/2008 


378,000.00 


100% 


226,800.00 


378,000.00 


0% 


151,200.00 





Mittal Investment (pending) 


6/30/2008 


135,000.00 


100% 


81,000.00 


135,000.00 


0% 


54,000.00 





Hong Kong Tong Tai Petroleum Int'l Corp. 


9/26/2008 


135,000.00 


100% 


81,000.00 


135,000.00 


0% 


54,000.00 





Tullow 




12/12/2008 


1,358,124.16 


100% 


814,874.50 


1,358,124.16 


0% 


543,249.66 





Anadarko Petroleum 




1/14/2009 


372,164.25 


100% 


223,298.55 


372,164.25 


0% 


148,865.70 





Total S.A 




7/3/2008 


90,000.00 


100% 


54,000.00 


90,000.00 


0% 


36,000.00 





Tullow 




12/12/2008 


84,882.56 


100% 


50,929.54 


84,882.56 


0% 


33,953.02 





Tullow 




12/12/2008 


70,000.00 


100% 


42,000.00 


70,000.00 


0% 


28,000.00 


ft 




Hong Kong Tong Tai Petroleum Int'l Corp. (pending) 




1,UUU,UUU.UU 




DUU,UUU.UU 


1,UUU,UUU.UU 




400,000.00 

























Sub Total 






3,623,170.97 




2,173,902.59 


3,623,170.97 




1,449,268.38 

























GRAND TOTAL 






12,386,024.39 




3,866,059.09 


5,986,024.44 




7,915,338.30 6,400,000.00 



Toal amount of NOCAL Revenue Share as per audit 


5,986,024.44 Total amount of NOCAL Revenue Share as per Schedule 


3,866,059.09 




Revenue without formal agreement 1,449,268,38 


Less: Net amount paid NOCAL 


■3,195,059.08 Less: Net amount paid NOCAL 


■3,195,059.08 




less: collection pending (454,000.00) 


Collection pending 


■1,135,000.00 Collection pending 


■681,000.00 




Net amount without agreement 995,265.38 


Amount due NOCAL as per audit 


1,655,965.36 


■9,999.99 







112 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



ANNEXURE 3A 



NOCAL TGS Revenue Recalculations 
Schedule of Revenue and Receipt 
January 2002 - November 2008 



































MOU 




invoice 






Interpretation 










Total 


NOCAL 


NftTAI Dow 


1(0 


TGS Rev 


Client 


Period 


Number 


Kms 


Rate 


Linceense 


Discount 


Tape Copy 


Product Charge 


Report 


111 All- 1 MM 

wells Log 


Amount 


% Per audit 


Per audit 


7o Per audit 


Per audit 


University of Utah 


4/29/2002 


B029799 


me rnn 

296.588 


N/A 


14,829.40 




620.73 








15,450.13 


50% 


7,725.07 


50% 


7,725.07 


Repsol 


11/30/2002 


M7629 




N/A 


h no nn~7 i h 

198,907.31 












198,907.31 


50% 


nn ipi rr 

99,453.66 


rnn/ 

50% 


nn An rr 

99,453.66 


Repsol 


11/30/2002 


M7Q1 "5 


0,110,U/U 


M/A 

N/A 


jiz,yjD.iy 


31,293.52 


4,984.11 








286625.78 50% 




3U/0 


QQ 


Woodside 


11/30/2002 


M7815 


4,136,112 


N/A 


511,842.50 




6,904.15 








518,746.65 


50% 


259,373.33 


50% 


259,373.33 


Oranto 


1/27/2004 


M7902 


3,002,325 


N/A 


555,430.13 












555,430.13 


50% 


277,715.07 


50% 


277,715.07 


Regal Petroleum 


1/27/2004 


M7942 




N/A 


100,000.00 












100,000.00 50% 


50,000.00 


50% 


50,000.00 


Repsol 


1/27/2004 


B031176 


1,698.78 


N/A 


420,440.63 


42,044.06 


2,798.13 








381,194.70 


50% 


190,597.35 


50% 


190,597.35 


Regal Petroleum 


1/27/2004 


M8137 


4,793.36 


N/A 


359,502.00 


23,500.00 








336,002.00 


50% 


168,001.00 


50% 


168,001.00 


Broadway 


1/27/2004 


M8179 


4,700.00 


N/A 


869,500.00 












869,500.00 


50% 


434,750.00 


50% 


434,750.00 


































Regal Petroleum 


1/27/2004 


M8276 


4,793.36 


N/A 


599,170.38 












599,170.38 10% 


59,917.04 


90% 


539,253.34 


Oranto 


1/27/2004 


M8259 


1,699,000 


N/A 


314,315.00 




2,548.50 








316,863.50 10% 


31,686.35 


90% 


285,177.15 


Esso 


1/27/2004 


B031702 


1,206,300 


N/A 


207,483.60 






2,109.77 






209,593.37 10% 


20,959.34 


90% 


188,634.04 


Prior Yeat Totals 










4,464,356.14 


96,837.58 


17,855.62 


2,109.77 






4,387,483.95 


1,743,491.08 




2,643,992.99 





ExxonMobile Exploration 1/27/2004 


0000650 


1,387,738 


N/A 433,322.03 




2,916.61 






436,238.64 


10% 43,623.86 


90% 


392,614.78 




ExxonMobile Exploration 1/27/2004 


0000784 


350,000 


N/A 1,371,877.50 




6,879.25 






1,378,756.75 


10% 137,875.68 


90% 


1,240,881.08 




ExxonMobile Exploration 1/27/2004 


0000853 


0.000 


N/A 886,336.50 




5,431.68 






891,768.18 


10% 89,176.82 


90% 


802,591.36 




Anadarko Petroleum 11/26/2007 


0000951 


4,543,463 


500 52,056.29 










52,056.29 


10% 5,205.63 


90% 


46,850.66 






























Anadarko Petroleum 11/26/2007 


0000951 


0.000 


1,651,742.31 




7,292.37 






1,659,034.68 


10% 165,903.47 


90% 


1,493,131.21 




Total S.A 11/26/2007 


001495 


699.98 


500 378,000.00 




1,300.00 


90,000.00 


24,300.00 


493,600.00 


10% 49,360.00 


90% 


444,240.00 




Mittal Investment 11/26/2007 


001460-Data 


0.000 


150,000.00 










150,000.00 


10% 15,000.00 


90% 


135,000.00 




























2007 Totals 






4,923,334.63 





23,819.91 


90,000.00 


24,300.00 


5,061,454.54 


506,145.45 




4,555,309.00 








9.387.690.77 






90,000.00 


24,300.00 


9,448.49 


2,249,636.53 




7,199,301.96 




% of ] [Mributl6fi mo f / "f Accounta 


bility, transparency, Integrity and Fiscal Probity 


















Mittal Investment 11/26/2007 


001460-Data Lie 


150,000.00 












10% 15,000.00 







Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Net Amounts 






ft in £ftft n 

9,237,690.77 


2,234,636.53 


Less Payments by TGS 










-1,928,956.50 


Amount Due NOCAL Per Audit 








305,680.03 


Interest on amount 14% Liberia 








4z,/93.zU 


Additional Revenue to NOCAL 








348,475.23 














NOCAL Cash receipt from TGS 








1,928,956.50 


Less Cash Payment to NOCAL thru 12/07 














oyt,uyo.uy 


Amount Should have been in Escrow 








1,034,858.41 


Interest on amount in Escriw 14% ( Liberia) 














144,880.18 


Total Amount Due NOCAL 










1,179,738.59 


Payment Thru 10/08 










1,034,858.41 












144,880.00 


Total Amount Due NOCAL 










493,355.41 



114 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



ANNEXURE 3B 



Analysis of TGS-NOPEC SHARE OF REVENUE BASED ON PARAGRAPHS OF AGREEMENT 





Amount (US$) 


Share of sales from 2002-2007 (see Annexure 3A) 


7,199,301.00 


Less: Amount repaid by NOCAL from proceeds generated-sales 


-6,400,000.00 


Additional revenue after repayment of TGS-NOPEC Debt 


799,301.00 


Invoice not yet paid by customer 


-135,000.00 


Additional Revenue Less Outstanding Sales 


664,301.00 


50% excess over new revenue rate of 40% assigned to TGS-NOPEC (i.e. instead of 


332,150.50 


new assigned share of 40%, 90% share of Revenue was used in arriving at 




US$7,199,301.96 as TGS' assigned share) 




Amount currently awaiting payment by customer (50% of US$135,000.00 to be 


-67,500.00 


remitted to NOCAL's Account 




Difference/ Bala nee Due NOCAL 


264,650.50 



Annexure 5 



Date 


Description 


Ref #/CK # 


Amount 




Balance brought Forward 




72,863.39 


8/7/2006 


Transfer CK 467906 Dep IFO N.O.C 


467906 


900.00 


8/21/2006 


Transfer EBL 


EBLIT060821-3216 


49,970.00 


8/25/2006 


Transfer Oronto Petroleum 


EBLIT0608258-3605 


250,000.00 


8/29/2006 


Transfer LBDI Ck 791046Dep 


34956 


50,000.00 








350,870.00 










9/1/2006 


Cash deposit by Timothy Wiaplahl05483 


34957 


21.00 


9/4/2006 


Transfer TSS NSPESSEO 


EBLIT060904-3730 


49,970.00 








49,991.00 



115 | Promoting Accountability, Transparency, Integrity and Fiscal Probity 



GAC: 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Date 


Description 


Ref #/CK # 


Amount 




Balance brought Forward 




72,863.39 










10/6/2006 


Transfer TGS NOPEC Geophysical Co 


EBLIT06101006-4261 


50,000.00 


10/12/2006 


Transfer CBL CK DEP slip 120807 


FT0628500097 


28,089.00 








78,089.00 










11/22/2006 


Transfer Clearing CBL CK 72144 DEP 


FT0632600089 


26,438.00 










12/22/2006 


Transfer Clearing CBL CK 84149 Dep 


FT0635600179 


13,161.00 


















1/16/2007 


Transfer CBL CK Dep 87192 




17,118.00 










2/16/2007 


Transfer Woodside Energy UK 


EBLIT070129-488 


4,975.00 


2/16/2007 


Transfer REPSOL Exploration 


EBLIT070213-726 


4,972.00 


2/20/2007 


Transfer CBL CK 94175 DEP 


FT0705100300 


10,882.00 


2/28/2007 


Cash Deposit by Timothy Wiaplah 


149553 


150.00 








20,979.00 


















3/5/2007 


Transfer Ck IFO Nat. Oil Co #553318 


FT0706401108 


1,397.00 


3/8/2007 


Transfer IB CK #000021 DEP 


FT0706500702 


5,000.00 


3/13/2007 


Transfer TGS NOPEC GEOphysical Co 


FT0707201054 


94,988.00 


3/19/2007 


Cash Deposit by Timothy Wiaplah DN 198303 


TT0707800782 


100.54 


3/26/2007 


Transfer CBL CK 114560 Dep 


FT0708500656 


8,905.00 








110,390.54 










5/3/2007 


Traansfer CBL CK Depl24454-132022 


217075 


25,724.32 



116 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Date 


Description 


Ref #/CK # 


Amount 




Balance brought Forward 




72,863.39 


5/7/2007 


Cash Deposit by timothy Wiaplah DN 223591 


TT07 12700994 


1,800.00 


5/9/2007 


Cash Deposit by timothy Wiaplah DN 223742 


TT0712900121 


50.00 


5/11/2007 


Cash Deposit by timothy Wiaplah DN 225433 


TT0713100551 


2,000.00 


5/11/2007 


Transfer TGS NOPEC Geophysical Co 


EBLIT070511-2517 


9,666.20 


5/21/2007 


Transfer ck 610609 Dep IFO National Oil 


FT0714100281 


3,500.00 








42,740.52 










6/4/2007 


Transfer clearing CBL check 140771 Dep 


239900 


9,100.00 


6/14/2007 


Cash Deposit Ifo National oil Co 


242698 


5,600.00 








14,700.00 












Grand Total 





Operating Account USD 

A/C Number 10210030612011 

Schedule of Income July 2007/June 2008 



(ANNEXURE 5 Cont'd ) 



Date 


Description 


Ref #/CK # 


Amount 






Opening Balance 




23,854.74 




7/9/2007 


Transfer CBL CK 154893 Dep 


FT0719000768 


10,474.00 


7/10/2007 


Cash Deposit by Timothy Wiaplah 10869 


TT0719100272 


5,000.00 


deposit slip seen 








15,474.00 
























8/22/2007 


Transfer Broadway Consolidated PLC 


FT0723400054 


299,965.00 


credit advice seen 












9/4/2007 


Transfer CBLCK 180164 Dep 


FT0724700864 22,743.00 


Deposit slip seen 



117 Promoting Accountability, Transparency, Integrity and Fiscal Probity 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Date 


Description 


Ref #/CK # 


Amount 














10/15/2007 


Transfer CBL CK 155221 Dep 


FT0728801136 


13,171.00 


deposit slip seen 












11/15/2007 


Transfer Broadway Con. Pic 


FT0731900536 


423,965.00 


credit advice seen 


11/15/2007 


Cash deposit by Timothy on 76146 


TT073 1900207 


130.00 


deposit slip seen 








424,095.00 














12/11/2007 


Transfer TGSNOPEC FT0734500087 


21,666.10 


Not seen in cash listing 












1/18/2008 


Transfer CBL CK Dep 271850 


FT0801800265 


11,751.00 


deposit slip seen 


1/24/2008 


Transfer CBL CK Dep 271880 


FT0802400220 


11,751.00 


deposit slip seen 








23,502.00 














2/4/2008 


Transfer Clearing CBL CK 261656 Dep 


FT0803501028 


14,926.00 


deposit slip seen 


2/20/2008 


transfer A2DTechnologies Inc S542772ICP021908 


FT0805100738 


2,450.00 


credit advice seen 








17,376.00 














4/8/2008 


Transfer CBL CK0298827 Clearing Dep 


FT0809900657 


16,989.01 


Deposit slip seen 












5/2/2008 Transfer IFO national Oil Co. BOD NOCAL Hydrocarbon Dev. Fund 


FT0812301687 


50,000.00 1 Credit advice not seen 


5/16/2008 Transfer NOCAL Hydrocarbon Dev. Fund 


FT0813701788 


164,000.00 1 Credit advice not seen 








214,000.00 














6/17/2008 


Transfer REPSOL Exploration SA 


FT08 16900480 


3,950.84 


Credit advice seen 


6/25/2008 


Transfer clearing of Ck Dep 39486 


FT08 17700592 


38,485.51 


deposit slip seen 


6/30/2008 


Transfer A2D Technologies Inc. FT0818202584 5,250.00 


not seen in cash Listing 






47,686.35 





118 | Promoting Accountability, Transparency, Integrity and Fiscal Probity OftC" 

„,,.„,...'..,„...„ f 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Date 


Description 


Ref #/CK # 


Amount 






Grand Total 




1,140,522.20 





Hydrocarbon Account USD 
A/C Number 10210030612027 
Details of Income July 2006/June 2007 



(ANNEXURE 5 Cont'd) 



Date 


Description 


Ref #/CK # 


Amount 




Opening Balance 






9/6/2006 


Transfer Ck 445805 


FT0624900134 


246,250.00 



Special Account LD 

A/C Number 10210030611015 

Details of Income July 2006/June 2007 



(ANNEXURE 5 Cont'd) 



Date 


Description 


Ref #/CK # 


Amount 




Balance brought Forward 






3/23/2007 


TransferEBL Clearing CBLCKS17293- 17277 Dep 


FT0708200805 


352,009.54 


3/23/2007 


Cash Deposit by Timothy Wiaplah onl01569 


TT0708200522 


8,460.00 








360,469.54 


4/3/2007 


Transfer ClearingCBLCK17630Dep 


FT0712001191 


182,506.66 










5/3/2007 


Transfer Clearing CBL Ck 20660 Dep 


FT0712300053 


179,838.26 


5/9/2007 


Cash Deposit by Timothy Wiaplah 


124595 


3,000.00 


5/9/2007 


Cash Deposit by Timothy Wiaplah 


124651 


1,200.00 








184,038.26 



119 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



(ANNEXURE 5 Cont'd) 



Date 


Description 


Ref #/CK # 


Amount 


6/19/2007 


Transfer Clearing CBL Ck 20404 Dep 


FT0717001137 


177,505.00 












Total 




904,519.46 




Converted at the rate of USD 58 




15,595.16 



Hydrocarbon Account USD 
A/C Number 10210030612027 



Details of Income July 2007/June 2008 



ANNEXURE 5 Cont'd 



Date 


Description 


Ref #/CK # 


Amount 










7/24/2007 


Transfer clearing IB CK85Dep 


FT0720500270 


2,000.00 


7/25/2007 


Transfer EBL Act on IB CK 85 Deposit 


FT0720600587 


200,000.00 




Sub Total 




202,000.00 










9/12/2007 


Transfer 8550Ck 608178 Dep IFO NOCAL Hydrocarbon 


FT0725500248 


295,465.52 


9/19/2007 


Transfer ATLAS Petroleum IFO National Oil 


FT0726200786 


1,499,980.00 




Sub Total 




1,795,445.52 










1/1/2008 


Payment of Interest 


LD0728100018 


17,000.00 










4/14/2008 


Payment of interest 


LD0804400016 


14,155.56 


4/14/2008 


Payment of interest 


LD0804400015 


3,033.33 




Sub Total 




17,188.89 












Grand Total 




2,031,634.41 



120 | Promoting Accountability, Transparency, Integrity and Fiscal Probity 



GAC: 



Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Details of Income July 2007/June 2008 ANNEXURE 5 Cont'd 



Date 


Description 


Ref #/CK # 


Amount 



Special Account LD 

A/C Number 10210030611015 

Schedule of Income July 2007/June 2008 (ANNEXURE 5 Cont'd) 



DATE 


DESCRIPTION 


REF #/CK # 


AMOUNT 


7/9/2007 


Transfer CBL CK DEP 


20414 


179,839.00 


9/11/2007 


Transfer CBLCK Deposit 


20965 


78,465.48 


10/10/2007 


Transfer Clearing CBL Ck 22231 Dep 


Ft0727400789 


178,639.00 










1/2/2008 


Transfer Clearing CBL Ck 23569 Dep 


FT0800200955 


190,798.80 










2/6/2008 


Transfer Clearing CBL Ck 44322Dep 


FT0803701198 


182,414.00 


2/7/2008 


Transfer Clearing CBL Ck 44326Dep 


FT080800743 


188,949.00 




Sub Total 




371,363.00 










3/3/2008 


Transfer Clearing CBL Ck 44405 Dep 


FT0806302579 


188,949.00 










6/25/2008 


Transfer clearing Ck38954 Dep 


FT0817700661 


508,847.00 












Grand Total 




1,696,901.28 




Converted at the rate of 60 USD 




28,281.69 



121 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



National Oil Company 
Unknown Source of Income 

For the Fiscal Year 2006/2007 (ANNEXURE 6A) 





Operating USD Account 






Date 


Description 


Ref #/CK # 


Amount 


8/7/2006 


Transfer CK 467906 Dep IFO N.O.C 


467906 


900.00 


9/1/2006 


Cash deposit by Timothy Wiaplahl05483 


34957 


21.00 


2/28/2007 


Cash Deposit by Timothy Wiaplah 


149553 


150.00 


3/5/2007 


Transfer Ck IFO Nat. Oil Co #553318 


FT0706401108 


1,397.00 


3/8/2007 


Transfer IB CK #000021 DEP 


FT0706500702 


5,000.00 


3/19/2007 


Cash Deposit by Timothy Wiaplah DN 198303 


TT0707800782 


100.54 


5/7/2007 


Cash Deposit by timothy Wiaplah DN 223591 


TT0712700994 


1,800.00 


5/9/2007 


Cash Deposit by timothy Wiaplah DN 223742 


TT0712900121 


50.00 


5/11/2007 


Cash Deposit by timothy Wiaplah DN 225433 


TT0713100551 


2,000.00 


5/21/2007 


Transfer ck 610609 Dep IFO National Oil 


FT0714100281 


3,500.00 


6/14/2007 


Cash Deposit Ifo National oil Co 


242698 


5,600.00 




Total 




20,518.54 










For the Fiscal Year 2007/2008 
















7/9/2007 


Transfer CBL CK 154893 Dep 


FT07 19000768 


10,474.00 


11/15/2007 


Cash deposit by Timothy on 76146 


TT0731900207 


130.00 




Total 




10,604.00 



122 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Details of Hydro Carbon Funds Transferred to NOCAL operating account 



For the Fiscal Year July 07-June 08 (ANNEXURE 6B) 



Date 


Description 


Ref #/CK# 


Amount 


5/2/2008 


Transfer IFO national Oil Co. BOD NOCAL Hydrocarbon Dev. Fund 


FT0812301687 


50,000.00 


5/16/2008 


Transfer NOCAL Hydrocarbon Dev. Fund 


FT0813701788 


164,000.00 




Total 




214,000.00 



Unknown Source of Income 
For the Fiscal Year 2006/2007 

( ANNEXURE 6C) 

Special Account LD 



Date 


Description 


Ref #/CK # 


Amount 


3/23/2007 


TransferEBL Clearing CBLCKS17293-17277 Dep 


FT0708200805 


352,009.54 


3/23/2007 


Cash Deposit by Timothy Wiaplah onl01569 


TT0708200522 


8,460.00 


5/9/2007 


Cash Deposit by Timothy wiaplah 


124595 


3,000.00 


5/9/2007 


Cash Deposit by Timothy wiaplah 


124651 


1,200.00 




Total 




364,669.54 



123 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



Account Balances 

For the period July 06 to June 08 

Annexure 7A 



Account Title 


Opening Balance 
Per Bank 


LD Converted 
58 tol 


Closing Balance 
Per Bank 




July 1,2006 




June 30,2007 


Operation Account USD 


72,863.39 




23,854.74 










Hydro Carbon Account USD 






79,659.37 










Special Account LD 




15,018.27 


871,059.46 


Total USD 






118,532.38 











Annexure 7B 





Opening Balance 
Per Bank 


LD Converted 
60 to 1 


Closing Balance 
Per Bank 




July 1,2007 




June 30,2008 


Operation Account USD 


23,854.74 




272,723.63 










Hydro Carbon Account USD 


79,659.37 




7,693.88 










Special Account LD 


871,059.46 


41,383.78 


2,483,026.74 


Total USD 






321,801.29 



124 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



(ANNEXURE 8) 









Amount 


DESCRIPTION 


VOUCHER # 


CHECK # 


US$ 


LD$ 


Payment for replenished petty cash for July -Aug. 2006 


278 


431851 


100.00 


_ 


Payment for replenished petty cash for Aug. 2006 


288 





97.00 




payment to replenished petty cash for sept.2006 


469 


451893 


100.00 


_ 


payment to replenished petty cash for sept.2006 


491 


445815 


88.00 


_ 


payment to replenished petty cash for oct.2006 


537 


476553 


85.25 


_ 


payment to replenished petty cash for oct.2006 


549 


476585 


86.00 


_ 


payment to replenished petty cash for oct.2006 


270 


476507 


93.00 


_ 


payment to replenished petty cash for nov.2006 


143 


513411 


100.00 


_ 


payment to replenished petty cash for dec.2006 


342 


513462 


91.00 




payment to replenished petty cash for jan. 2007 


591 


513485 


99.00 


_ 


payment for garbage collection fee for jan. 2007 


365 


552901 


6.00 


_ 


payment for replenished petty cash jan. 2007 


400 


552930 


94.00 


_ 


payment for replenished petty cash feb.2007 


4 


552933 


99.00 


_ 


payment for replenished petty cash mar.2007 


54 


552974 


98.00 




payment for replenished petty cash apri.2007 


84 


553007 


99.00 


_ 


payment for replenished petty cash apri.2007 


508 


553029 


54.00 


_ 


payment for replenished petty cash may. 2007 


538 


7008831 


_ 


6,000.00 


payment for replenished petty cash may. 2007 


225 


334656 


_ 


5,340.00 


payment for replenished petty cash jun.2007 


236 


334659 




5,720.00 


payment for replenished petty cash jun.2007 


424 


334660 




5,280.00 


payment for replenished petty cash nov.2007 


142 


334676 




5,630.00 


payment for replenished petty cash nov.2008 


451 


334685 




2,940.00 


payment for replenished petty cash may. 2008 


592 


334690 




5,810.00 


payment for replenished petty cash jun.2008 


648 


334692 




5,945.00 


payment for replenished petty cash Jun .2008 


348 


334683 




5,635.00 



125 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 









Amount 


DESCRIPTION 


VOUCHER # 


CHECK # 


US$ 


LD$ 


payment for replenished petty cash july.2006 


417 


451810 


84.00 


_ 


payment for replenished petty cash july.2006 


446 


451838 


74.00 




payment for replenished petty cash aug.2006 


291 


451865 


93.00 


_ 


payment for replenished petty cash nov.2006 


113 


476532 


94.00 




payment for replenished petty cash Dec.2006 


333 


513457 


66.00 




payment for replenished petty cash jul.2007 


3 


334668 




5,150.00 


payment for replenished petty cash aug.2007 


240 


334665 




5,864.00 


payment for replenished petty cash sept.2007 


86 


334671 




5,060.00 


payment for replenished petty cash nov.2007 


256 


334678 




5,705.00 


payment for replenished petty cash Jan .2008 


328 


334680 




5,610.00 


payment for replenished petty cash mar .2008 


402 


334687 




5,645.00 


payment for replenished petty cash apr.2008 


530 


334688 




5,005.00 








1,800.25 


86,339.00 



(ANNEXURE 9A) 



NO. 


DATE 


VOUCHER # 


VOUCHER DESCRIPTION 


AMOUNT 


PAYEE 


CHECK # 


1 


Septemberl 1,2007 


65 


Payment for (1) one 
ticket to Freetown 


371 


SLOK AIRLINES 


486322 


2 


Septemberl0,2007 


53 


Payment for (3) three air 
tickets 


11,449.28 


BRUSSELS AIR LINES 


486318 


3 


August27,2007 


238 


Payment for (1) one air ticket 


490 


ALBERT T. CHIE 


486312 


4 


August 27,2007 


239 


Payment for (1) one air ticket 


90 


FODEE KROMAH 


486311 



126 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



INU. 


UA 1 1 


\/AI irUED -H- 


\/ni irucD nccroTDTTAM 


A fulfil IMT 

AMUUIN 1 


D A VCC 

HAY tt 


LMtLK # 


r 



NovemDer z/,zuu/ 




Payment for (1) one way air 
ticket (for V.P.TECH) 
REIMBURSEMENT ) 




lArr\D C CAMHTI/TC 

JACUd o. bANDllvlt 


by/ /Uo 


6 


August 17,2007 


222 


Payment for three (3) air 
tickets 


815 


SLOK AIRLINE 


486298 


7 


August 28,2007 


237 


Payment for one (1) ticket 


490 


MARIE E. PARKER 


486313 


8 


September 4,2006 


474 


Payment for two (2) air 
tickets 


2,116.00 


BELLVIEW AIRLINE 


451898 


g 


Anril 3 2008 


431 


Pavmpnl" fnr air tirkpr^ CV\ 

1 Ct V 1 1 Id 1 L 1 \JI Oil LI LIvCLJ v y 


7 569 00 


BRUSSEL ATRLTNES 

LJ -_J._JL_ 1_ nl 1 \ 1 L INI 


757922 


10 


Januarv 28 2008 


352 


Pavment for air ticket (1} one 


1 647 00 


BRUSSEL AIRLINES 


673922 


11 


8-Nov-06 


112 


Payment for one round trip 
ticket 


947 


SLOK AIRLINES 


476531 


12 


10-Sep-07 


62 


Payment for two round trip 
tickets 


742 


SLOK AIRLINES 


486319 




TOTAL 






27,139.28 







127 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 

ANNEXURE 9B 



DATE 


PAYEE 


Vouch 
er# 


CK 

# 


Da 

ys 


Rate 


PER 
DIEM 


VISA 


AIR 

PORT 

TAX 


TICKET 


INCID 
ENT 


ACCOM. 


TOTAL 


LOCATION 


SPONSOR 


COMMENT 


10- 
Sep- 
07 


Albert T. 
Chie 


54 


486 
317 


11 


200.00 


2,200.0 





25.00 








2,225.00 


JOC Tech. 
meetings 


NOCAL 


foreign travel 


10- 
Sep- 
07 


Fodee 
Kromah 


57 


486 
314 


11 


350.00 


3,850.0 





25.00 








3,875.00 


London 


NOCAL 


foreign travel 


28- 
Jan- 
08 


Jacob S. 
Sandikie 


354 


673 
924 


12 


300.00 


3,600.0 



400.00 


25.00 




600.00 




4,625.00 


UK/Ghana/S. Leone 


NOCAL 


foreign travel 


13- 
Nov- 
06 


Fodee 
Kromah 


116 


476 
534 


7 


350.00 


2,450.0 













2,450.00 


London 


NOCAL 


foreign travel 


29- 
Jan- 
08 


Albert T. 
Chie 


359 


673 
930 


10 


200.00 


2,000.0 













2,000.00 


London 


NOCAL 


foreign travel 


7- 
Feb- 
07 


Marie E. 
Leigh-Parker 


373 


486 
240 


12 


300.00 


3,600.0 













3,600.00 


U.S.A 


NOCAL 


foreign travel 


3-Apr- 
08 


Marie E. 
Leigh-Parker 


435 


757 
927 


11 


200.00 


2,200.0 











2,250.00 


4,450.00 


London/U.S.A 


NOCAL 


Ticket & 9 days accommodation 
at 250 per night 


3-Apr- 
08 


Jacob S. 
Sandikie 


436 


757 
926 


6 


150.00 


900.00 










1,200.00 


2,100.00 


London/U.S.A 


NOCAL 


foreign travel, perdiem 3 days 
accommodation at 400.00 per 
night 


7- 
Feb- 
07 


Marie E. 
Leigh-Parker 


372 


486 
239 


















500.00 


U.S.A 


NOCAL 


Excess Baggage with no 
documentation to prove. 


3-Apr- 
08 


Brussels 
Airlines 


431 


757 
922 












7,569.0 







7,569.00 


London/U.S.A 


NOCAL 


1 business class @ 4, 094.00, 1 
economy class @ 1,996.00, 1 
economy class @ 1,678.00 


10- 
Sep- 
07 


Clemenceau 
B. Urey 


56 


486 
315 


11 


350.00 


3,850.0 





25.00 








3,875.00 


London 


NOCAL 


foreign travel 



128 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



DATE 


PAYEE 


Vouch 
er# 


CK 

# 


Da 

ys 


Rate 


PER 
DIEM 


VISA 


AIR 

PORT 

TAX 


TICKET 


INCID 
ENT 


ACCOM. 


TOTAL 


LOCATION 


SPONSOR 


COMMENT 


9- 
Mar- 
07 


Fodee 
Kromah 


19 


486 
252 


4 


350.00 


1,400.0 





25.00 








1,425.00 


Sierra Leone 


NOCAL 


foreign travel 


17- 
Aug- 
07 


Marie E. 
Leigh-Parker 


225 


486 
295 


7 


300.00 


2,100.0 





50.00 








2,150.00 


S. Leone/London 


NOCAL 


foreign travel 


17- 
Aug- 
07 


Fodee 
Kromah 


224 


486 
294 


7 


350.00 


2,450.0 













2,450.00 


S. Leone/London 


NOCAL 


foreign travel 


7- 
Feb- 
07 


Timothy G. 
Wiaplah 


375 


486 
242 


14 


350.00 


4,900.0 













4,900.00 


U.S.A 


NOCAL 


Foreign travel. Check raised in 
Timothy Wiaplah name for Urey 


7- 
Feb- 
07 


Fodee 
Kromah 


374 


486 
241 


14 


350.00 


4,900.0 













4,900.00 


U.S.A 


NOCAL 


foreign travel 


28- 
Aug- 
07 


Marie E. 
Leigh-Parker 


237 


486 
313 








400.00 


40.00 


50.00 






490.00 


S. Leone 


NOCAL 


foreign travel 


10- 
Sep- 
07 


Brussels 
Airlines 


53 


486 
318 












11,449. 
28 






11,449.28 


London 


NOCAL 


Economy class 3,445.26, 
business class 8,004.02. 


28- 
Jan- 
08 


Brussels 
Airlines 


352 


673 
922 












1,647.0 







1,647.00 


JOC tech. meetings 


NOCAL 


economy class 1,647.00 


4-Apr- 
08 


Albert T. 
Chie 


439 


757 
930 
















1,200.00 


1,200.00 


London/U.S.A 


NOCAL 


foreign travel 


3-Apr- 
08 


Albert T. 
Chie 


437 


757 
925 


6 


300.00 


1,800.0 













1,800.00 


London/U.S.A 


NOCAL 


foreign travel 


22- 
Nov- 
07 


Clemenceau 
B. Urey 


187 


697 
699 


4 


350.00 




1,400. 
00 










1,400.00 


Ghana 


NOCAL 


foreign travel 














42,200. 
00 


2,200. 
00 


215.00 


20,715. 
28 


600 


4,650.00 


71,080.28 









129 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



National Oil Company 

Schedule of Payments Not traced to Bank statement ANNEXURE 10 A 

For the Period July 2006-June 2008 



DATE 


PAYEE 


CK# 


ACCT# 


PURPOSE 


USD 


19-Nov-07 


Monrovia Investment Service Station 


697684 


10-2100306-12-027 


utility gas 


33.33 


6-Feb-07 


Mamba Point Hotel 


486237 


10-2100306-12-027 


Hotel accommodation 


4,233.00 


19-Oct-07 


Mum-Meh Auto Garage 


673912 


10-2100306-12-011 


Vehicle Maintenance 


130.00 


28-May-07 


LBS 


760414 


10-2100306-12-011 


Air-bid round 


100.00 


23-Jan-07 


Heritage News paper 


486228 


10-2100306-12-027 


press release 


50.00 


29-Apr-08 


Ink Publishing-Spirit Magazine 


Trans 


10-2100306-12-011 


Advertisement 


5,400.00 


14-Feb-08 


ATA spare service 


673948 


10-2100306-12-011 


N/A 


652.00 


20-Jun-08 


Atlantic Life & General Insurance Co. 


760448 


10-2100306-12-011 


N/A 


3,227.06 




Total 








13,825.39 



Schedule of Vendor Confirmation Versus Audit Verification 



For the Fiscal Period July 2006-June 2008 ANNEXURE 10 B 



Vendor 


Amt per Vendor in USD 


Amt per audit 
verification in 
USD 


Over 

Statement 


under 
Statement 


Total 

Misstatement 


Royal Stationery Stores INC 


10,303.00 


10,865.41 




562.41 


562.41 


PA'S Rib House 


1,199.25 


6,109.50 




4,910.25 


4,910.25 


National Printers 


1,492.00 


572.00 


920.00 




920.00 


FedEx 


760.00 


120.00 


640.00 




640.00 


Metro Stationery Store 


2,319.50 


1,036.00 


1,283.50 




1,283.50 


Marconi & Company 


497.00 


687.00 




190.00 


190.00 


Total 


16,570.75 


19,389.91 


2,843.50 


5,662.66 


8,506.16 



130 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Report of the Auditor-General on the National Oil Company of Liberia (NOCAL) 
For the Fiscal Years 2006/2007, 2007/2008 



ANNEXURE 11: Payment of Board Fees made to Non-Board Members 



No. 


Date 


Payee 


Code 


m m _ _ ■ M m 

Voucher # 


Check # 


Amount (US$) 


1 


19-JUI-07 


Dr. Fodee Kromah 


70-08-804 


5 


608193 


3,000.00 


2 


l-Aug-07 


Dr. Fodee Kromah 


70-08-804 


201 


486272 


500.00 


3 


3-Aug-07 


Dr. Fodee Kromah 


70-08-804 


209 


486279 


2,500.00 


4 


November 6,2007 


Dr. Fodee Kromah 


70-08-804 


144 


697662 


1,000.00 


5 


25-Jan-08 


Dr. Fodee Kromah 


70-08-804 


351 


697749 


1,500.00 


6 


ll-Mar-08 


Dr. Fodee Kromah 


70-08-804 


488 


<~»/~v jh r\ **■» 

802403 


2,000.00 


7 




25-Apr-08 


Dr. Fodee Kromah 


70-08-804 


546 


760362 


2,000.00 




Sub-Total 










$ 


12,500.00 


8 


ll-Mar-07 


Mrs. Marie E. Leigh 


70-08-804 


479 


674048 


$ 


200.00 


9 


28-May-07 


Mrs. Marie E. Leigh 


70-08-804 


596 


760407 


$ 


200.00 


10 


27-Nov-07 


Mrs. Marie E. Leigh 


70-08-804 


191 


697702 


$ 


400.00 




Sub-Total 










$ 


800.00 


11 


H H rv it — 7 

ll-Mar-07 


Mr. Jacob S. Sandikie 


70-08-804 


478 


/"* — 7 yl vl 

674049 


$ 


200.00 


12 


28-May-07 


Mr. Jacob S. Sandikie 


70-08-804 


594 


760408 


$ 


200.00 


13 


27-NOV-07 


Mr. Jacob S. Sandikie 


70-08-804 


194 


697705 


$ 


400.00 




Sub-Total 










$ 


800.00 


14 


-1-1 ft. A . /~\ — 7 

ll-Mar-07 


Mr. Fulton D. 


— 7 /~\ /~\*~» f*»/~V ✓! 

70-08-804 


477 


674050 


$ 


150.00 


15 


28-May-07 


Mr. Fulton D. 


70-08-804 


594 


760409 


$ 


150.00 


16 


27-Nov-07 


Mr. Fulton D. 


70-08-804 


193 


697704 


$ 


300.00 




Sub-Total 










$ 


600.00 


17 


ll-Mar-07 


Mrs. Christiana 


70-08-804 


476 


802401 


$ 


150.00 


18 


28-May-07 


Mrs. Christiana 


70-08-804 


593 


760410 


$ 


150.00 


19 


27-Nov-07 


Mrs. Christiana 


70-08-804 


192 


697703 


$ 


300.00 




Sub-Total 










$ 


600.00 






Grand Total 




$ 


15,300.00 



131 I Promoting Accountability, Transparency, Integrity and Fiscal Probity 




Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



NON DEDUCTION OF INCOME TAXES FROM BOARD FEES ANNEXURE 12 



uate 


Payee 


Code 




converx to lu 


1 axes computation 


AnnUal laX LU 


1 ICn Tav 

usu lax 


1 Till n^/TH 1iir» f!7 


otepnen d. uunDcir, jr 


/-UUo-OU'r 


0,UUU.UU 


taq nnn nn 


1 4Q nnn nn 


rri 7/in nn 


QQ") 07 




OalllUt.1 D. V_UU|JCi / Jl 


7_nnR-Rn4 

/ UUO OUT 


5 nnn nn 


?qo non nn 


qo nnn nn 


40 i4n nn 


fiQ2 07 




Fv/plvn *^ Kandpikpii 

LVCIVI 1 kJi l\Q 1 IUuixQI 


7-008-804 

/ \J\JIJ OUT 


fi 000 00 

\J f\J\J\J .\J\J 


?48 non nn 


14ft nnn nn 


si 74n nn 


892 07 




Fuapnp Shannon 


7-008-804 


2 000 00 


116 000 00 


6 000 00 


9 540 00 


164.48 




Antninpttp 9avph 


7-008-804 


1 000 00 


58 000 00 

JU^UUUiUU 


8 000 00 

U^UUU iUU 


2 940 00 


50.69 




Plpmpnrpai i R 1 JrPV 


7-008-804 

/ UwU UU~ 


7 000 00 

/ 1 \J\J\J m \J\J 


406 000 00 

TUU^UUUiUU 


6 000 00 

\J f\J\J\J iUU 


63 640 00 

\JJf \Ji\J ■ uu 


1,097.24 




Ppt-pr R lallah 

r C LC 1 L-> i J U 1 1 U 1 1 


7-008-804 

/ UwU UU~ 


4 100 00 

If J. \J\J m \J\J 


237 800 00 

£._)/ f\J\J\J iUU 


37 800 00 


29 700 00 

\J\J iUU 


512.07 




AlkaH- /""hie* 


7 nno qc\a 


t nnn nn 


1 74 nnn nn 


~?a nnn nn 


1 q *)4n nn 






i otai 




74 1 nn nn 


1 077 Qnn nn 


c-17 onn nn 


ic7 con nn 


4,013.1/ 


1-JUrU// jU-JUm-Uo 


















rOQcc Ivromcin 


7 nno 


1 o cnn nn 


771; nnn nn 

/ ZD, UUU.UU 


nnn nn 


1 at TQn nn 


T 470 04 




btepnen d. uunDcir, Jr 


7 nno on4 


a nnn nn 


nnn nn 

J4o, UUU.UU 


1 4Q nnn nn 


rri 7/in nn 


QQ") H7 




rcLci D. JaMaM 


7 nno on^i 


£. Ann nn 


"3qo Qnn nn 

■DoZ,oUU.UU 


1 onn nn 

1oZ,oUU.UU 


7nn nn 


1 ni 7 r>7 




C ^ rv* i iqI D /*"* r\ArtQr "If 

DdlllUcI D. L-UOpcl, Jl. 


/-UUo oUt- 


c 9nn nn 


^ni Ann nn 

.5U1,0UU.UU 


1 m Ann nn 


ai j.fin nn 


70-1 r>7 




LVeiyn d. KanQaKcil 


7 nno 


a nnn nn 


nnn nn 

J4o, UUU.UU 


1 4Q nnn nn 




QQ7 07 




Fiinpnp ^hannnn 

1 UUCI It 1 CI 1 II 1 KJ 1 1 


7-008-804 

/ UUU Uv I 


10 500 00 

lU^JUUiUU 


609 000 no 

UU J^wwUiUU 


2n9 nno oo 

LU^^UUUiUU 


114 39n no 

J- 1T^J?UiUU 


1,972.24 




Clemenceau B. Urey 


7-008-804 


11,000.00 


638,000.00 


238,000.00 


121,640.00 


2,097.24 




Christiana N. Harmon 


7-008-804 


600.00 


34,800.00 


22,800.00 


1,380.00 


23.79 




Fulton D. Reeves 


7-008-804 


600.00 


34,800.00 


22,800.00 


1,380.00 


23.79 




Jacob S. Sandikie 


7-008-804 


800.00 


46,400.00 


34,400.00 


1,960.00 


33.79 




Marie E. Leigh-Parker 


7-008-804 


800.00 


46,400.00 


34,400.00 


1,960.00 


33.79 




Timothy G. Wiaplah 


7-008-804 


300.00 


17,400.00 


5.400.00 


510.00 


8.79 




Total 




6 0,900.00 


3,532,200.00 


1,472,200.00 


591,250.00 


10,193.97 




Grand Total 




95,000.00 


5,510,000.00 


2,000,000.00 


858,930.00 


14,809.14 



** Exchange rate $USD 1 : $58LD 



132 I Promoting Accountability, Transparency and Fiscal Probity 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



Board fees Vouchers Avail for Audit 
For the Fiscal Period July 2006-June 2007 ANNEXURE 13A 



Date 


A/C 
Code 


Payee 


Description 


Voucher # 


CK# 


Amount 
per 

Voucher 


Amount per 

Income 

statement 


Variance 


March 
27,2007 


7-008- 
804 


Evelyn S. Kandakai 


Advance payment against 1st and 
2nd quarter board Fees for 2007 


70 


552993 


2,000.00 






March 
27,2007 


7-008- 
804 


Peter B. Jallah 


Advance payment against 1st and 
2nd qtr board Fees for 2007 


71 


552992 


1,500.00 






March27,200 
7 


7-008- 
804 


Stephen B. 
Dunbar, Jr 


Advance payment against 1st and 
2nd qtr board Fees for 2007 


73 


552990 


2,000.00 






March 
27,2007 


7-008- 
804 


Samuel B. Cooper 


Advance payment against 1st and 
2nd qtr board Fees for 2007 


72 


552991 


2,000.00 






Nov. 27, 
2006 


7-008- 
804 


Peter B. Jallah 


payment of Board allowance for 
4th quarter 


150 


513418 


200.00 






Dec. 4,2006 


7-008- 
804 


Albert Chie 


Payment representing Board fees 
for 4th qtr 2007 


329 


513448 


1,000.00 






Aug.9,2006 


7-008- 
804 


Clemenceau B. 
Urey 


Board Allowance for third quarter 
2006 


280 


N/A 


1,000.00 






Aug.9,2006 


7-008- 
804 


Antoinette Sayeh 


Board Allowance for third quarter 
2006 


289 


451863 


1,000.00 






Aug.9,2006 


7-008- 
804 


Eugene Shannon 


Board fees for third quarter2006 


285 


N/A 


1,000.00 






Aug.9,2006 


7-008- 
804 


Stephen B. 
Dunbar, Jr 


Board Allowance for third quarter 
2006 


281 




1,000.00 






Aug.9,2006 


7-008- 
804 


Evelyn S. Kandakai 


Board Allowance for third quarter 
2006 


284 




1,000.00 


















13 r 700.00 


35,000.00 


21,300.00 



133 I Promoting Accountability, Transparency and Fiscal Probity 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



Board fees Vouchers Avail for Audit 

For the Fiscal Period July 2007-June 2008 Annexure 13B 



Date 


A/C Code 


Payee 


Description 


Voucher # 


CK# 


Amount 

per 
Voucher 


26-Jun-08 


7-008-804 


Samuel B. Cooper 


Advance payment of Board Fees to 
applied in next budget 


665 


760454 


1,000.00 


March 11,2008 


7-008-804 


Fodee Kromah 


Board Fees for third quarter 
2007/2008 


488 


802403 


2,000.00 


March 11,2008 


7-008-804 


Christiana N. Harmon 


Payment against Board fees for 
third quarter 07/08 


476 


802401 


150.00 


Feb. 20,2008 


7-008-804 


Peter B. Jallah 


Payment against Board fees for 
Board member quarterly Allowance 


455 


674021 


250.00 


3-Aug-07 


7-008-804 


Clemenceau B. Urey 


Board fees against fiscal budget 
07/08 including arrears 


208 


486280 


3,500.00 














6,900.00 



134 I Promoting Accountability, Transparency and Fiscal Probity 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



Un-retired Foreign Travel Advances ANNEXURE 14 



No 


Date 


Payee 


Description 


Check # 


Amount US$ 


1 


Feb. 7,07 


Marie E.Leigh-Parker Mrs. 


Perdiem 


486240 


3,600.00 


2 


Feb. 7,07 


Marie E. Leigh-Parker Mrs. 


Excess baggage 


486239 


500.00 


3 


Feb. 7,07 


Fodee Kromah 


Perdiem 


486241 


4,900.00 


4 


Feb. 7,07 


Timothy G. Wiaplah 


Perdiem 


486242 


4,900.00 


5 


Feb. 8,07 


SN. Brussels Airline 


Air Ticket 


486244 


7,076.48 


6 


March 2,07 


Stephen B. Dunbar 


Perdiem 


486249 


2,100.00 


7 


March 2,07 


Jacob S. Sandikie 


Perdiem 


486250 


1,800.00 


8 


March 2,07 


Clemenceau Urey 


Perdiem 


486248 


2,100.00 


9 


March 2,07 


Fodee Kromah 


Perdiem 


486247 


2,100.00 


10 


March 9,07 


Sbk Air 


Air Ticket 


486251 


366.00 


11 


March 9,07 


Fodee Kromah 


Air port tax/ perdiem 


486252 


1,425.00 


12 


March 12,07 


Jacob S. Sandikie 


Albwance 


552945 


1,000.00 


13 


March 21,07 


Marie E. Leigh-Parker Mrs. 


Reinbursement 


552970 


70.00 


14 


March 22,07 


Christian N. Harmon 


Visa- Hong-kong 


552975 


141.00 


15 


23-Mar-07 


Clemenceau Urey 


Reinbursement 


552981 


9,700.00 


16 


May 1,07 


Fodee Kromah 


Perdem 


553041 


1,500.00 


17 


May 1,07 


Jacob S. Sandikie 


Perdem 


V#0531 


800.00 


18 


Aug. 27, 07 


Fodee Kromah 


Airtfcket 


486311 


90.00 


19 


Aug. 28, 07 


Marie E. Leigh-Parker Mrs. 


Airtfcket/APT/Visa 


486313 


490.00 


20 


Sept. 10,07 


Marie E. Leigh-Parker Mrs. 


Perdem/Apt 


486316 


3,325.00 


21 


Aug. 17,07 


Marie E. Leigh-Parker Mrs. 


Perdem/Apt 


486295 


2,150.00 


22 


Aug. 17,07 


Sbk Air 


Airtbkets 


486298 


815.00 


23 


Aug. 17,07 


Fodee Kromah 


Perdiem 


486294 


2,450.00 


24 


Aug. 17,07 


Albert T. Che 


Perdem 


486300 


825.00 


25 


Aug.27,07 


Albert T. Che 


Airtfcket/APT 


486312 


490.00 


26 


Sept. 10,07 


Brusesels Airlines 


Airtbkets 


486318 


11,449.28 


27 


Sept. 10,07 


Albert T. Che 


Perdem/Apt 


486317 


2,225.00 


28 


Sept. 10,07 


Clemenceau Urey 


Perdem/Apt 


486321 


1,425.00 


29 


Sept. 10,07 


Fodee Kromah 


Perdem/Apt 


486314 


3,875.00 


30 


Sept. 10,07 


Clemenceau Urey 


Perdem/Apt 


486315 


3,875.00 


31 


Sept. 11,07 


Sbk Air 


Air-tbket 


486322 


371.00 


32 


Oct. 2,07 


Cbmenceau Urey 


Britist Visa 


608196 


450.00 


33 


Oct. 19 ,07 


Gritaco Travel Agency 


Airtickets 


486329 


1,428.45 


34 


Oct. 19 ,07 


Sbk Air 


Air tickets 


486330 


222.00 


35 


Oct. 19 ,07 


Sbk Air 


Air tickets 


486332 


286.00 


36 


Oct. 19 ,07 


Jacob S. Sandikie 


Per dem/APT 


486331 


1,825.00 


37 


Oct. 22, 07 


Cletus S. Waterson 


Per dem/APT 


697653 


700.00 


38 


Oct. 22, 07 


Gritaco Travel Agency 


Air tfckets 


486348 


2,491.40 


39 


Oct. 22, 07 


Cletus S. Waterson 


Per dem 


486347 


1,400.00 


40 


Oct. 22, 07 


Fodee Kromah 


Per dem 


697652 


700.00 



135 I Promoting Accountability, Transparency and Fiscal Probity 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



41 


Oct. 22,07 


Fodee Kromah 


Per diem 


486346 


1,400.00 


42 


Nov. 21,07 


Gritaco Travel Agency 


Air-tickets 


697697 


2,491.40 


43 


Nov. 22,07 


Clemenceau Urey 


Perdiem 


697699 


1,400.00 


44 


Nov. 22,07 


Fodee Kromah 


Perdiem 


697698 


1,400.00 


45 


Nov. 27,07 


Jacob S. Sandikie 


Air-T icket 


697706 


413.00 


46 


Dec. 4, 07 


Jacob S. Sandikie 


Honorarium 


697716 


1000 


47 


Jan. 28,08 


Jacob S. Sandikie 


Perdiem, Visa/APT 


673924 


4625 


48 


Jan. 28,08 


Brusesels Airlines 


Air- ticket 


673922 


1647 


49 


Jan. 29,08 


Fodee Kromah 


Perdiem 


697749 


3500 


50 


Jan. 29,08 


Gritaco Travel Agency 


Air-tickets 


673929 


4,905.77 


51 


Jan. 29,08 


Brusesels Airlines 


Air-tickets 


672928 


4,061.00 


52 


Jan. 29,08 


Albert T. Chie 


Perdiem 


673930 


2,000.00 


53 


Jan. 30,08 


Fulton D. Reeves 


Local 


673931 


286.00 


54 


April 3,08 


Albert T. Chie 


Perdiem 


757925 


1,800.00 


55 


April 3,08 


Brusesels Airlines 


Air-tickets 


757922 


7,569.00 


56 


April 3,08 


Jacob S. Sandikie 


Perdiem/Hotel Accom 


757926 


2,100.00 


57 


April 3,08 


Marie E.Leigh-Parker Mrs. 


Perdiem/Hotel Accom 


757927 


4,450.00 


58 


April 4,08 


Albert T. Chie 


Hotel Accommondation 


757930 


1,200.00 


59 


April 15,08 


Marie E.Leigh-Parker Mrs. 


Hotel Accom mondatbn 


802438 


1,200.00 


60 


May 16,08 


Fodee Kromah 


Local 


760383 


1,000.00 


61 


May 30,08 


Fodee Kromah 


Local perdiem 


760416 


1,000.00 


62 


Jun. 3,08 


Fodee Kromah 


Local perdiem 


76422 


1,500.00 


63 


Jun. 18.08 


Marie E.Leigh-Parker Mrs. 


Local perdiem 


760438 


1,800.00 




GRAND TOTAL 






136,584.78 



Over-Payment of Per-diem advances to NOCAL's Staff 

(ANNEXURE 16) 



Date 


Payee 


Area(s) Travel 


Actual US$ 


Approved Perdiem US$ 


Excess US$ 


Oct. 22,o7 


Fodee Kromah 


Ghana 


700.00 


$97*2=194 


$ 506.00 


Oct. 22,o7 


Fodee Kromah 


Ghana 


1,400.00 


$97*4=388 


$ 1,012.00 


Nov. 22, 07 


Fodee Kromah 


Ghana 


1,400.00 


$97*4=388 


$ 1,012.00 


Nov. 22, 07 


Clemenceau Urey 


Ghana 


1,400.00 


$97*4=388 


$ 1,012.00 


Sept. 10, 07 


Clemenceau Urey 


Sierra Leone 


1,400.00 


$129*4=516 


$ 884.00 


May 16,08 


Fodee Kromah 


South Eastern 


1,000.00 


$58*3=174 


$ 826.00 


30-May-08 


Fodee Kromah 


South Eastern 


1,000.00 


$58*3=174 


$ 826.00 


Jun. 3, 08 


Fodee Kromah 


South Eastern 


1,500.00 


$58*7=406 


$ 1,094.00 


18-Jun-08 


Mrs. Parker 


Cairo 


1,800.00 


$192*6=1,152. 


$ 648.00 


Sept. 4, 06 


Fodee Kromah 


Nigeria 


1,750.00 


$198*5days 


$990.00 


Sept. 4, 06 


Clemenceau Urey 


Nigeria 


1,750.00 


$198*5days 


$ 990.00 


Mar. 2, 07 


Jacob Sandike 


Spain 


1,800.00 


$196*6=$1,176 


$ 624.00 


Mar. 2, 07 


Clemenceau Urey 


Spain 


2,100.00 


$196*6=$1,176 


$ 924.00 


Mar. 2, 07 


Fodee Kromah 


Spain 


2,100.00 


$196*6=$1,176 


$ 924.00 


Mar. 2, 07 


Cllr. Stephen B. Dunbar 


Spain 


2,100.00 


$196*6=$1,176 


$ 924.00 


Oct. 19, 07 


Jacob S. Sandike 


South Africa 


1,800.00 


$171*6=$1,026 


$ 774.00 


Oct. 22,o7 


Cletus Waterson 


Ghana 


700.00 


$97*2=194 


$ 506.00 


Oct. 22,o7 


Cletus Waterson 


Ghana 


1,400.00 


97*4=388.00 


$ 1,012.00 


Total 






26,400.00 


$ 15,488.00 



136 I Promoting Accountability, Transparency and Fiscal Probity 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



Irregular Payments-Third Party 

(ANNEXURE 17) 



No. 


Payee 


Description 


payment 
Voucher 


Check 
number 


AMT (LD) 


AMT (USD) 


1 


Theonie Outland 


News papers 


268 


451843 




20.68 


2 


Christiana N. Harmon 


Oath of fidelity & secrecy 


287 


451861 




100.00 


3 


Theonie Outland 


News papers 


470 


451894 




15.00 


4 


marie E. Leigh Parker 


reimbursement 


493 


445817 




58.50 


5 


Emmanuel Doe 


40-watt gbbe 


531 


445848 




30.50 


6 


Timothy G. Wiaplay 


public relation 


532 


445849 




300.00 


7 


Theonie Outland 


News papers 


536 


476552 




14.00 


8 


Christiana N. Harmon 


vehicle repairs 


245 


476514 




355.00 


9 


Timothy G. Wiaplay 


contributbn 


296 


476515 




1000.00 


10 


Theonie Outland 


News papers 


297 


476517 




14.00 


11 


Emmanuel Doe 


gate bck 


126 


476575 




75.00 


12 


marie E. Leigh Parker 


reimbursement 


103 


476522 




109.66 


13 


marie E. Leigh Parker 


vehicle maintenence 


322 


573441 




9.00 


14 


Henry M. Gray 


vehicle maintenence 


326 


513444 




70.00 


15 


marie E. Leigh Parker 


vehicle maintenence 


324 


513443 




375.00 


16 


Theonie Outland 


News papers 


330 


513449 




15.00 


17 


Theonie Outland 


News papers 


343 


51363 




14.00 


18 


Theonie Outland 


News papers 


331 


334681 


600.00 




19 


Timothy G. Wiaplay 


tag hoder gratuity 


570 


486209 


0.00 


175.00 


20 


Timothy G. Wiaplay 


contingency 


577 


486214 


0.00 


230.00 



137 I Promoting Accountability, Transparency and Fiscal Probity 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



21 


Timothy G. Wiaplay 


honorarium 


583 


486221 


0.00 


150.00 


22 


Timothy G. Wiaplay 


honorarium 


586 


486223 


0.00 


120.00 


23 


marie E. Leigh Parker 


vehicle rental 


585 


486222 


0.00 


375.00 


24 


marie E. Leigh Parker 


vehicle rental 


594 


486226 


0.00 


360.00 


25 


Theonie Outland 


News papers 


364 


552902 


0.00 


16.00 


26 


Theonie Outland 


News papers 


18 


552938 


0.00 


13.00 


27 


marie E. Leigh Parker 


vehicle rental 


60 


552980 


0.00 


2510.00 


28 


Theonie Outland 


News papers 


82 


334651 


880.00 




30 


Emmanuel Doe 


distilled water & charging 


79 


334652 


740.00 




31 


Theonie Outland 


News papers 


530 


334653 


820.00 




32 


Theonie Outland 


News papers 


234 


334658 


880.00 




33 


Theonie Outland 


News papers 


435 


334664 


950.00 




34 


marie E. Leigh Parker 


cost of chairman sandal 


25 


608160 


0.00 


80.00 


35 


Theonie Outland 


News papers 


213 


334667 


1040.00 




37 


marie E. Leigh Parker 


reimbursement 


51 


608175 


0.00 


98.00 


38 


Theonie Outland 


News papers 


59 


334669 


880.00 




39 


Henry M. Gray 


vehicle rental 


77 


608189 


0.00 


300.00 


41 


Theonie Outland 


News papers 


87 


334670 


800.00 




42 


Christiana N. Harmon 


entertainment 


100 


673905 


0.00 


41.00 


43 


Timothy G. Wiaplay 


consultancy 


104 


486328 


0.00 


2000.00 


44 


Timothy G. Wiaplay 


NOCAL Guest-Adv. Payment 


118 


683918 


0.00 


100.00 


45 


Theonie Outland 


News papers 


141 


334627 


920.00 




46 


Edward M.Cephas 


janitorial supply 


155 


697666 


0.00 


158.90 


47 


Edward M.Cephas 


Vehicle registration 


430 


334662 


800.00 




47 


Edward M.Cephas 


painting materials 


159 


697670 


0.00 


232.00 


48 


Emmanuel Doe 


janitorial work & laundry 


177 


697691 


0.00 


40.00 


49 


Henry M. Gray 


cylinder bck & laundry 


179 


697689 


0.00 


35.00 


50 


marie E. Leigh Parker 


reimbursement 


77 


552999 


0.00 


60.00 


51 


Theonie Outland 


News papers 


282 


334679 


780.00 






Jacob S. Sandikie 


P. A 


507 


445825 


0.00 


100.00 


54 


marie E. Leigh Parker 


electrical materials 


336 


673990 


0.00 


25.00 


55 


Emmanuel Doe 


electrical materials 


335 


334682 


850.00 




56 


Timothy G. Wiaplay 


reimbursement 


337 


673989 


0.00 


170.00 


57 


marie E. Leigh Parker 


vehicle maintenence 


376 


674013 


0.00 


100.00 


58 


Henry M. Gray 


facilatatbn 


459 


674028 


0.00 


45.00 


59 


marie E. Leigh Parker 


facilatatbn 


460 


674027 


0.00 


50.00 


60 


marie E. Leigh Parker 


facilatatbn 


463 


674029 


0.00 


20.00 


61 


Christiana N. Harmon 


Oath of fidelity & secrecy 


468 


674033 


0.00 


50.00 


62 


Emmanuel Doe 


plumbing material 


465 


334686 


1400.00 




63 


Emmanuel Doe 


maintenance building 


489 


802404 


0.00 


51.00 


64 


Timothy G. Wiaplay 


stratch cards 


422 


757914 


0.00 


50.00 


65 


Henry M. Gray 


vehicle rental 


424 


757915 


0.00 


2080.00 


66 


Dr.Fodee Kromah 


vehicle rental 


538 


760351 


0.00 


455.00 


67 


Henry M. Gray 


vehicle rental 


537 


760353 


0.00 


400.00 


68 


Emmanuel Doe 


generator maintenance 


555 


334689 


1400.00 




69 


marie E. Leigh Parker 


Courier service 


559 


760374 


0.00 


146.00 


70 


marie E. Leigh Parker 


Courier service 


624 


760434 


0.00 


73.00 



138 I Promoting Accountability, Transparency and Fiscal Probity 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



71 


marie E. Leigh Parker 


vehicle maintenence 


647 


760437 


0.00 


40.00 


72 


Christiana N. Harmon 


cylinder bck 


431 


334663 


1575.00 




73 


Emmanuel Doe 


Lighting materials 


227 


486305 




36.00 


72 


Clemenceau B. Urey 


Excess bages 


489 


445812 




1863.00 


73 


Jacob S. Sandikie 


reimbursement 


543 


476561 




694.16 


74 


Clemenceau B. Urey 


reimbursement 


379 


674010 




350.00 


75 


Edward M.Cephas 


fuel oil tank & janit. supplies 


76 


552998 




110.79 




TOTAL 






15,315.00 


16,578.19 



ANNEXURE 18A 



Equipment and Furniture whose positions have been Changed with no update to the Asset 

Listing 


EQUIPMENT 


NO 


item 


serial /code 


formal position 


present position 


1 


DUMP STARLING 
PHONE 


BR/FF-0038 


BOARD ROOM 


GEN. SERVICE 


2 


SPILT UNIT 




CONFERENCE ROOM 




3 


TELEPHONE 


NOCAL/CRM/E- 
0060 


CONFERENCE ROOM 


INTERNALAUDIT OFF. 


4 


PROJECTOR SCREEN 


GS/E-0024 


GEN. SERVICE 


BOARD ROOM 


5 


HP DESTOP 
COMPUTER 


NO CODE 


PRESIDENT OFFICE 




6 


WAIL CLOCK 




PRESIDENT OFFICE 




7 


UPS/APC 


SPG/E-0106 


SPG/TS 


HR .OFF 


8 


CALCULATOR DESK 


VPA/E-0189 


VPA OFFICE 


GEN SERVICE 


9 


SPILT UNIT 


NOCAL /PO/E- 
0175/176 




CONFERENCE ROOM 












Furniture 


NO 


item 


serial /code 


formal position 


present position 


1 


BOOK CASE 


AC/FD/FF-0125 


ACCT./FINACE .DEPT. 


GEN SERVICE 


2 


clerical desk 


FF-0084 


Adm .date office 


Gen .service 


3 


EXECUTIVE CHAIR 
SEMI 


ADM/00/FF-0085 


AdM. DATE OFICE 


BOARD ROOM 


4 


Executive DESK 


BR/FF-0018 


BOARD ROOM 


GEN. SERVICE 


5 


VISITOR CHAIR 


000GS/FF-0003 


FINACE OFFICE 


REPRODUCTION ROOM 


6 


EXECUTIVE CHAIR 


GS/FF-0006 


GEN. SERVICE 


BOARD ROOM 


7 


VISITOR CHAIR 


GS/FF-0152 


GEN. SERVICE 


INTERNALAUDIT OFF. 


8 


VISITOR CHAIR 


GS/FF-0151 


GEN. SERVICE 


INTERNALAUDIT OFF. 


9 


L- SHARP DESK 


VP/TS/FF-007&007 


GEN. SERVICE 


INTERNALAUDIT OFF. 


10 


VISITOR CHAIR 


GS/FF-0154 


GEN. SERVICE 


ES PRESIDENT OFF 


11 


VISITOR CHAIR 


HR/FF-0091 


HUMAN RESOURCE OFFICE 


BOARD ROOM 


12 


EXECUTIVE DESK 


PO/FF-0036A 


PRESIDENT OFFICE 


GEN. SERVICE 


13 


EXECUTIVE CHAIR 


NOCAL 
/PO/FF/0037 


PRESIDENT OFFICE 


PRESIDENT CONFERENCE 
ROOM 



139 I Promoting Accountability, Transparency and Fiscal Probity 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



ANNEXURE 18A 



Equipment and Furniture whose positions have been Changed with no update to the Asset 

Listing 


14 


Counter/TABLE 


RR/FF-0097B 


REPRODUCTION ROOM 


BOARD ROOM 


15 


CLARICAL CHAIR 


RR/FF-0098 


REPRODUCTION ROOM 


FINANCE DEPT. 


16 


VISITOR CHAIR 


SPG/F-0114 


SENIOR PET.GEOLOGIST 
OFFICE 


BOARD ROOM 


17 


CLARICAL CHAIR 


TS/FF-0106 


TECHNICAL SERVICE 


BOARD ROOM 


18 


EXECUTIVE CHAIR 


VP/TS/FF-0099 


VP/TS 


INTERNALAUDIT OFF. 


19 


EXECUTIVE DESK 


NO CODE 




PRESIDENT OFFICE 



ANNEXURE 18B 



Equipment and Furniture not recorded in the Asset Listing 


EQUIPMENT 


N 
o. 


item 


serial /code 


formal 
position 


present 
position 


Comme 
nt 


1 


Chunlan AC 


NOT CODED 


NEW 


GEN. SERVICE 




2 


INTERNET SWITCH 


SN/CDF IG831172 


NEW 


BOARD ROOM 


(GOOD) 


3 


SHARP TV 


NOT CODED 


NEW 


BOARD ROOM 


DAMAGE 


4 


PANASONIC TELEPHONE 


KX- 

T7730X9FAFD5359 
23 


NEW 


PREST.SECT.OFF 


NEW 


5 


TOSHIBA LAPTOP 


3937135Q/NOT 
CODED 


NEW 


VP TECH. OFF. 




6 


HP LESEPJET PRINTER 


CNCT84JHIZ 


NEW 


INTERNALAUDIT 
OFF. 




7 


HP LAPTOP 


2CE928LT93 


NEW 


INTERNALAUDIT 
OFF. 




8 


SPILT UNIT (CHUNLAN 




NEW 


INTERNALAUDIT 
OFF. 




9 


SPLIT UNIT (CHUNLIAN) 


VP/E-0160 


NEW 


VP ADM. OFF. 




10 


AUTOMATIC VOLTAGE 
REGULATOR 


NOT CODED 


NEW 


VP ADM. OFF. 




11 


STARLINE PHONE 


EBE609E/NOT 
CODED 


NEW 


HR .OFF 




12 


TRADER/PAPER EATER 


388417 


NEW 


FINANCE DEPT. 




13 


STABLELIZOR 


NOT CODED 


NEW 


FINANCE DEPT. 




14 


HP DESKJET PRINTER 


CNH3Q4S5VG 


NEW 


FINANCE DEPT. 




15 


UPS 


NOT CODED 


NEW 


AMDMINISTRATI 
ON 




16 


UPS 


NOT CODED 


NEW 


FINANCE DEPT. 




Furniture 




item 


serial /code 


formal 
position 


present 
position 


Comme 
nt 


1 


FOUR Drawers Cabinets 


NOT CODED 


NEW 


GEN. SERVICE 




2 


FOUR BID BOXES 


NOT CODED 


NEW 


GEN. SERVICE 





140 I Promoting Accountability, Transparency and Fiscal Probity 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



Equipment and Furniture not recorded in the Asset Listing 


o 
J 


Dl r\C\S 11 1 OMADC/ODrC\ 

dLULIv ll-lZl v IArb^ZrLbJ 


mat /T"\r*pr* 
l\IU 1 cuutu 


MPVA/ 

NtVV 


bUAKU KUUI V I 


(JMtVV ) 




TGS OFF SHORE LIB MAP(IA 










A 

4 


;NOI LOUtU 




IMtW 


BOARD KOOrl 


NtW 


r 


4 UKAVVAL CAblNt 1 


mat /r*\r*pr* 
l\IU 1 cuutu 


MPVA/ 


rKtb.btC 1 .Urh 




6 


EXCEATIVE CHAIR 


NOT CODED 


NEW 


VP TECH.OFF. 












INTERNALAUDIT 




/ 


CVCn 1TT\/C /""UIATD 

tXtLU 1 IVt LHA1K 


IMtW/IMO 1 LOUtL) 


IMtW 


Arr 

Orh 












TMTFRMAI Al IDTT 
1IM 1 CrvlMMLMUL/l 1 




Q 
O 


A r>DA\A/AI PARTMFT 
t UKAVVAL CABIN t 1 


mp\a//mot rnnpn 

NtVV/NUI UUUtU 


NtVV 


OFF 

urr. 




Q 

y 


MPTAI r°\ ACC CArTM^ CUIPI 1 

l v lt 1 AL (jLAbb rAClNu ontLL 


l\IU 1 cuutu 


MPVA/ 

NtVV 


rKtMUtN 1 Ur r 












ES PRESIDENT 

1 _> r [XLJIL'LI il 1 




10 


4 DRAWALS CABINET 


NOT CODED 


NEW 


OFF 




11 


WOODEN BOOK SHELL 


NOT CODED 


NEW 


HR .OFF 




12 


POTENTIAL PROSECTIVITY 




NEW 


BOARD ROOM 


(NEW) 










PRESIDENT 




13 


EXECUTIVE DESK 


NO CODE 


NEW 


OFFICE 

















141 I Promoting Accountability, Transparency and Fiscal Probity 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



EXHIBIT -1 



Funds Transfer Initiation 
Transaction Detail Report 
By I .151 Entry Date. Status, and Amount 
111 02r20€9 04103 2009 



Bank 10: 02t«OQ21 



Iran Type: 
Drawdown Ind: 
Tran ID: 



PAYMEKl 



Paymvnt AltiUunt: tiSH 1 ieS.IC7 59" 

Cusi Rt-f: 
Bene Rel: 



By Order; 
Address: 



Account USD 1S2413C24J 
Accl Name: TGS NCPEC 

Confirmation No: 3^t?9Q0f>«JO30C0 

Cloanno Ref 0309MWOSS91:! 



PayWetlioo- Oi r 

Value Dale: 02' 1 2/2009 
Status: Released 



Baneftciary is a Bank: No 

Debit Bank Cttgsr fte'tuSt* 

Ultimate Bene: 102I003O612011 

Name: rtATlONAt Oil COMPANY OF LIBERIA 
Address: 



Bens Bank: 0103 Intermediary: 

Name: DEUTSCHE BAMK TRUST CO AMERICAS Name: 

Address: BANKERS TRUST PLAZA.NEW YORK Address: 
NEW VOflK.UNITEO STATES 



Ban* In1 o: 



Payment Delail: FFC ECOBANK LIBERiA LTD 

accto w'lteej 



Last Entered By: GT4I6377 

Last Entered On: 02/12/2005 12:47 PM ET 

L*ll Approved By: G74IS377 

Last Approved On: 02/1 2/20C9 ]2.4~ PM El 

RcJrwsrd By: G7416i72 

RofcasedOn: 02/12^2009 02'?t PM ET 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 




■ Reply 



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Bcc; [ 

' O Subject: (re additional expenditure 



>Rrom; "Prince Arthur Eze" <orantoon@msn.cOTi> 
>To: mparkerlib@hotmail.com " 
>Subject: RE: additional expenditure 
>Date: Wed, 11 Apr 2007 17:38:26 +0100 
> 

>mY DEAR mARIE , 

> GO AHEAD AND HELP THEM WITH 1500 DOLLARS 

> BEST WISHES 

> PRINCE EZE 

»From: "Marie Leigh-Parker" <mparkerlib@hotmail.corn> 
>>To: orantcoil@nisri.com 
>>5ubjeet: additional expenditure 
»03ta: Wed, 11 Apr 2007 15:16:39 +0000 
» 

>>Heilo: The derks and secretarial staff are also asking fix 1,500 
»US$. Should we do this and have you added to the total amount? 1 

> > cannot do this without your consent. Please let me hear from you B I : — . 

»urgently to move this forward. 

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A3 Promoting Accountability, Transparency and Fiscat 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



X/3/73 

4 ,n December, 2008 




TGS J 

ORIGINAL 



To: Dr. Fodee Kromah - President CEO 

National Oil Company of Liberia (NOCAL) 
Episcopal Church Plaza, 3 rd Floor 
Corner of Ashmun & Randall Streets 
1000 Monrovia 10 
Liberia 

Dear Dr. Kromah: 



RECEIVE^ 
BSC n i ; 
■JGS-NOPSC, 



Ref: Licensing of 2D Seismic Data - Revenue Sharing of interim Sales 

This is to confirm our mutual agreement to share revenues received from 2D data licensed 
during the period from TGS-Nopec achieving USD6.4 million and the signing of a new data 
management agreement between NOCAL and the successful bidder. The agreed revenue 
share percentage is 40% to TGS and 60% to NOCAL. 

The above revenue sharing is agreed. 

For and on behalf of 
THE NATIONAL OIL COMPANY 
OF LIBERIA 



Narn^: Dr. Fodee Kromah 
Title: President a CEO 



TGS-NOPEC GEOPHYSICAL COMPANY 

By: s?c 
Name: David Hicks 
Title: Vice-President - AMEAP 




A sutBiliaiy of TGS-NOPEC Geophysical Company ASA. Norway 
tnewporstetf In tjie Uniied Kirroton RegBtsnsd in England No 239572S 



o 



144 | Promoting Accountability, Transparency and Fiscal Probity 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



Exhibit 4 



NATION M OIL COMPANY OF LIBERIA ( NOCAL) 
MONROVIA, LIBERIA 



BOARD MEMBERS' BONUSES - 2007 



NO. 


NAMES 


AMOUNT (LSD) 




GNATURE 


DATE 


1. 


CLEMENCEAU B. UREY, SR 


ijQOO.OO -v 








2: 


( • - T"\ 1 pi r rr^XT n TAT 'M[l AD Tt) 

S TEPHtN B. DUNBAR. JK. 


2.UIHJ.UU 






3. 


SAMUEL B. COOPER, JR. 


2,000.00 




/ . ' m 




4. 


PETER B. J ALLAH, JR. 


2,000.00 






5. 


D. EVELYN S. KANDAKA1 


2.000.00 






6. 


FODEE KROMAH 


2,000.00 






I fn : 

i / 1. *- ; 
/ / 


f 


EUGENE SHANNON 


2,000.00 








l 


SAMUEL B. COOPER, JR. 


2.000.00 






9. 


TOTAL: 


1^000.00 







\PPROVED: _^ _ ___ 

MAPI! } 1 EIGH-PARKKR (MBS.) 
MCE PRESIDENT 
ADMINISTRATION & M VANCE 



145 I Promoting Accountability, Transparency and Fiscal Probity 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



Exhibit 5 

PAGE 10 NATIONAL OIL COMPANY OF LIBERIA 
FIXED ASSETS RECORDS 



Dale 


Qty 


Description 


Serial It 


Location 


Assigned Code 


Cost US$ 




11/5/2008 


Ipiece 


Refrigerator 


-0- 


VP/Administration 


NQCAWPA/E-0144 


265 


k ■ 


11/5/2008 


Ipiece 


Refrigerator 


-0- 


VPflechnkalServiccs 


NOCAUVP/TS/E-0145 


265 




llnUUuo 


Ipiece 


Refrigerator 


-0- 


Comptroller/Finance 
Dept. 


f\uCAuru/t-014o 


265 




1 1/5/2008 


Ipiece 


Desk calculator 


■0- 


VP/Administration Dept. 


NOCAUVP/ADM/E-0147 


75 




4/23/2008 


Ipiece 


VPS/APC 


4> 


Human Resource Depl 


NOCAUUR/E-0148 


140 


- 






















Assets / Vehicle Record 














Description 


Engine tt 


License plate U 


Locution 


Cost USS 






1 


Toyota llilux twin-cabin-pkk-up 




BP -0876 


Utility 


29,995.00 






1 


Toyota prado/ Blue 


SL533534 
8 


BC-1967 


President/CEO 


44,690.00^ 






I 


Toyota land cruiser 


-0- 


BC-4353 


President /CEO 


57,550.00 , 






1 


Toyota fortuner 


MHYYX59 
GX880089 
27 


BC-1968 


VP/Administration 


36,900.00^ 






1 


Toyota hilux Twin-Cabin-pick-up 


-0- 


BP-1748 


VP/Technical Services 


30,750.00 < 




6/23/2007 


1 


Hover CUV 5 Doors Jeep 


SDC7949 


BC-4354 


Comptroller 


25,500.00^ 






1 


Toyota Hilux Twin-Cabin-pkk-up 


-fit 


BP-1767 


Senior PeLGeologisI 


30,750.00. 




1/17/2008 


1 


Toyota Hilux tmn-cabin-pkk-up 


5L- 

6034528 


-0- 


Board Chairman 


34,500.00 




4/6/2008 


1 


Nissan Primera 


GA/6- 
08680 


BC-4511 


Human Resource 


5,500.00^ 








GRAND TOTAL 








418,929.46 






14q Promoting Accountability, Transparency and Fiscal Probity 



Jraft Management Letter for discussion purposes only 
m NOCAL For Financial Years 2006/2007, 2007/2008 



GACIRL # 3 



EXHIBIT 6 



NATIONAL OIL COMPANY OF LIBERIA 

Comparative Statement of Income, Expenses and Retained Earnings 
For two(2) fiscal years (FY 2006/07 & FY 2007/08) 



OPERATING EXPENSES: 

GOL PAYMENT- (NATIONAL BUDGET) 
OFFICE VEHICLE 
SALARIES & WAGES 
BOARD FEES 

CUSTOM DUTY CHARGES 

ARREARS-SALARY & BENEFITS 

AIR TICKETS 

PER DIEM-FOREIGN 

ANNUAL INCENTIVES 

DEBT SERVICES-EXP. 

INTERMIN1STERIAL COMMITTEE 

OFFICE SPACE RENTAL (E.C.L) 

OTHERS OPERATING EXPENSES 

TOTAL OPERATING EXPENSES 

INCOME BEFORE DEPRECIATION EXPENSE 

DEPRECIATION EXPENSE 

NET INCOME 





AMOUNT(USD) 


AMOUNT(USD) 




6/30/2008 


6/30/2007 


REVENUES: 


FY2007/08 


FY2006/07 


HYDROCARBON DEVELOPMENT FUND 


1,250,000.00 


250,000.00 


SOCIAL WELFARE 


450,000.00 


0.00 


oi inr A Pr dchtai 

bURFAOE RENTAL 


292,850.00 


0.00 


UL PAYMENT 


225,000.00 


0.00 


ANNUAL TRAINING 


200,000.00 


0.00 


CAPITALIZATION-GOL SUBSIDY 


161,247.34 


154,705.21 


INTEREST REVENUE-TIME DEPOSIT 


34,188.89 


0.00 


MISCELLANEOUS(OTHER REVENUE) 


11,345.00 


8,568.51 


FUTURE REVENUE SHARING SCHEME-TGS NOPEC 


0.00 


150,000.00 


TRANSFER REVENUE RECOVERED 


2,450.00 


95,000.00 


LP.R.C. LOAN PROCEEDS 


0.00 


50,000.00 


SENSITIZATION REVENUE-OIL COMPANIES 


0.00 


15,000.00 


UPGRADING AIRLINE TICKETS-TGS NOPEC 


0.00 


9,666.20 


RECEPTION PRESENTATION 


0.00 


9,400.00 


TOTAL INCOME 


2,627,081.23 


742,339.92 



FY2007/08 

600,000.00 
215,950.00 
189,039.00 
60,400.00 
49,100.42 
40,741 .75 
39,156.75 
50,275.00 
36,391.78 
34,135.00 
33,500.00 
25,000.00 



FY2006/07 



215,587.75 
35,000.00 



20,824.00 
32,268.00 

27,051.78 

49,998.80 



1,705,534.79 


717,343.61 


921,546.44 


24,996.31 


16,118.94 


16,118.94 


905,427.50 


8,877.37 



I raft Management Letter for discussion purposes only 
n NOCAL For Financial Years 2006/2007, 2007/2008 



GACIRLf 3 

EXHIBIT 6 Cont'd 



NATIONAL OIL COMPANY OF LIBERIA(NOCAL) 
JCOMPARATIVE BALANCE SHEET 
IAS AT JUNE 30, 2008 



6/30/2008 



6/30/2007 3/31/2006 



ASSETS: 



CURRENT ASSETS: 



CASH AND BANK BALANCES 
STAFF ADVANCES- RECEIVABLE 
ACCOUNT RECIEVABLES 
RECEIVABLE-CAPITALIZATION(GOL) 
TOTAL CURRENT ASSETS 

FIXED ASSETS (NET) 

TOTAL ASSETS 

LIABILITIES: 

I CURRENT LIABILITIES: 

WITHHOLDING INCOME TAX (GOL) 
LOANS PAYABLE 
TOTAL CURRENT LIABILITIES 
LONG-TERM LIABILITIES: 



TGS-NOPEC-FUTURE SHARING PAYABLE 

TGS-NOPEC PAYABLE 

OTHER LIABILITIES 

TOTAL LONG-TERM LIAB. 

TOTAL LIABILITIES 

SHAREHOLDER'S EQUITY : 

SHARE CAPITAL 

RETAINED EARNINGS 

TOTAL SHAREHOLDER'S EQUITY 

ITOTAL LIABILITIES & SHAREHOLDER'S EQUITY 



CURRENT 


UNAUDITED 


AUDITED 


FY2007/2008 


FY2006/2007 




1,033,358.67 


108,811.23 


191.00 


2,573.00 


2,154.50 




137,358.57 


• 




200,000.00 


200,000.00 


- 


1,373,290.24 


311,104.73 


191.00 


379,174.25 


126,075.00 


135,746.00 


1,752,464.49 


437,179.73 


135,937.00 


87,281.24 


53,585.64 





30,000.00 


385,000.00 


85,000.00 


117,281,24 


438,585.64 


85.000.00 


0.00 


150,000.00 





46,950.46 


2,691,144.00 


2,691,144.00 


320,425.00 


320,536.00 


341,426.00 


367,375.46 


3,161,680.00 


3,032,570.00 


484,656.70 


3,600,265.64 


3,117,570.00 



456,652.50 384,937.82 86,668.00 

811,155.29 -3,548,023,73 -3,068,301.00 

1,267,807.79 -3,163,085.91 -2,981,633.00 

1,752,464.49 437,179.73 135,937.00 



l4s Promoting Accountability, Transparency and Fiscal Prob'n 



Draft Management Letter for discussion purposes only 
on NOCAL For Financial Years 2006/2007, 2007/2008 



EXHIBIT 6 Cont'd 



NATIONAL OIL COMPANY OF LIBERIA 






COMPARATIVE STATBMEN OF CASH FLOWS 






For two(2) fiscal years (FY 2006/07 & FY 2007/08) 






INFLOWS / RECEIPTS: 








AMOUNT(USD) 


AMOUNT(USD) 




6/30/2008 


6/30/2007 


ACCOUNT TITLE 


FY2007/08 


FY2006/07 


OPENING BANK BALANCES 


2S.277.35 


281.04 


HYDROCARBON DEVELOPMENT FUND 


1,250.000.00 


250,000.00 


SOCIAL WELFARE 


450,000.00 


0.00 1 


CI IOCAPC DCMTAI ' 


292,850.00 


0.00 J 


UL PAYMENT 


. 225 000 00 


O 00 I 


ANNUAL TRAINING 


200,000.00 


0.00 


CAPITALIZATION-GOL SUBSIDY 


161,247.34 


154,705.21 


INTEREST REVENUE-TIME DEPOSIT 


34,188.89 


0.00 I 


MISCELLANEOUS(OTHER REVENUE) 


11,345.00 


8,568.51 


FUTURE REVENUE SHARING SCHEME-TGS NOPEC 


0.00 


150,000.00 1 


TRANSFER REVENUE RECOVERED 


2,450.00 


95,000.00 


LP R C LOAN PROCEEDS 




nnn nn H 
ou,uuu,uu 


SENSITIZATION REVENUE-OIL COMPANIES 


0.00 


15,000.00 1 


UPGRADING AIRLINE TICKETS-TGS NOPEC 


0.00 


9,666.20 1 


RECEPTION PRESENTATION 


0.00 


9 A0O GO 1 


TOTAL INFLOWS 


2,652,358.58 


742,620.96 j 


OUTFLOWS: 








FY2007/08 


FY2006/07 


GOL PAYMENT- (NATIONAL BUDGET) 


600,000.00 




OFFICE VEHICLE 


215 950 00 




SALARIES & WAGES 


1 89 039 00 

1 WW , W . W W 


^fl7" 7*^ HI 

£ IS, JO / . / O , : j 


BOARD FEES 


60 400 00 


35 ooo on 

VW | WW w. WW 


CUSTOM DUTY CHARGES 


49 100 42 




ARREARS-SALARY & BENEFITS 


40,741 .75 


1 


H AIR TICKETS 


39,156.75 


20 824 OO 1 


PER DIEM-FOREIGN 


50,275.00 


32 268 00 1 

Wfc < ^ W W » W W . ■ 


H ANNUAL INCENTIVES 


36 391 78 

WW, ww 1 « / w 




U DEBT SERVICING 


34,135.00 


27 051 78 B 


= INTERMINISTERIAL COMMITTEE 


33,500.00 




B OFFICE SPACE RENTAL (E.C.L) 


25 000 00 

w , WWW * WW 


49 998 80 H 


H FUEL - GENERATOR 


20,271.00 


10,517.75 


U PRINTING & DOCUMENTATION 


20,028.83 


17,353.13 I 


B MAINT-VEHICLE 


1 9,999.39 


16,155.40 


INT'L TRANSFER BANK CHARGES 


1 9,602.78 


5,279.55 


I OFFICE EQUIPMENT 


19,153.00 


1,956.25 j 


I INCOME TAX (EXPENSE) 


35,892.02 


27,472.25 


1 GASOLINE 


17,893.00 


20,137.50 


CONSULTANCY/LOBBYING FEES 


17,389.95 


121,900.00 


ARREARS-BOARD FEES 


16,350.00 




LEGAL FEES 


15,615.00 


5,450.00 


MAINT-GENERATOR 


10,799.58 


3,911.50 1 


COMPUTERS 


10,688.00 


1,410.00 I 


OTHERS 


108,162.54 


105,069.95 1 


TOTAL OUTFLOWS 


1,705,534.79 


717,343.61 1 




NET INCREASE /(DECREASE) IN CASH HELD 


946,823.79 


25,277.35 |